BofA profit beats estimates on investment banking, trading strength
Investment banking fees jumped 18%
Confidence among clients led to more debt, equity issuance
Shares up almost 3%
Adds quotes in paragraph 3-4, 15, updates share price in paragraph 6
By Arasu Kannagi Basil and Nupur Anand
Oct 15 (Reuters) -Bank of America's BAC.N third-quarter profit dropped as it paid more to customers to hold onto their deposits but the earnings beat estimates, propelled by stronger investment banking and trading.
Investment banking fees jumped 18% compared with a year agoto $1.4 billion as confidence among clients improved, spurring them to issue more debt and equity.
"Our customers' deposit balances and asset quality are healthy, and we believe we have good opportunities to grow," Chief Financial Officer Alastair Borthwick told journalists.
Regarding investment banking, Borthwick said, "We feel pretty good looking forward. We've got a good pipeline.
CEO Brian Moynihan called the earnings "solid," citing growth in investment banking, asset management fees and sales and trading revenue.
A revival in mergers and acquisitions has also boosted advisory fees, while the Federal Reserve's interest rate cut last month could spur even more dealmaking.
Shares rose 2.6% in premarket trading.
The earnings echo thoseof rival JPMorgan Chase JPM.N and Wells Fargo WFC.N, whose results last week surpassed expectations, underpinned by improving conditions for investment banking.
BofA's underwriting income jumped 39.7% in the quarter, while syndication fees rose 31%.
Moynihan said last month that heexpected investment banking revenue to be broadly steady.
Sales and trading revenue jumped 12% to $4.9 billion, the 10th consecutive quarter of year-on-year growth, as equities climbed18% while fixed income, currencies and commodities rose 8%.
Equities trading was bolstered by buoyant markets. Stocks rallied in the third quarter as investors speculated that the Federal Reserve would cut interest rates and spur economic activity.
BofA's wealth and investment management revenue climbed 8% to $5.8 billion and saw client balances jump 18% to $4.2 trillion, thanks to rising market valuations and client flows.
NII SEEN GROWING
BofA's net interest income (NII) - the difference between what a bank earns on loans and pays out on deposits - fell 3% to $14 billion in the third quarter from a year earlier. But it climbed 2% from the second quarter, marking an inflection point as the bank focuses on growing NII from here, Borthwick said.
"A step in the right direction, and we're optimistic that the uptrend can continue," Chris Kotowski, an analyst at Oppenheimer, wrote in a note.
Banks have been paying out higher interest rates amid intense competition for deposits to prevent customers from fleeing to lucrative alternatives such as money market funds.
BofA's provision for credit losses climbedto $1.5 billion in the quarter from $1.2 billion a year earlier.
Higher interest rates are pressuring borrowers and increasing risks of defaults, prompting banks to build bigger provisions for cover for such loan losses.
Still, U.S. consumer credit is"pretty good," while delinquencies and defaults have flattened out as expected, Borthwick said.
The second-largest U.S. bank's net income fell to $6.9 billion, or 81 cents per share, from $7.8 billion, or 90 cents per share, a year earlier. Analysts on average expected BofA to earn 77 cents per share, according to estimates compiled by LSEG.
BofA shares vs benchmark S&P 500 index https://reut.rs/4h8ofro
Reporting by Arasu Kannagi Basil in Bengaluru and Nupur Anand in New York; Editing by Lananh Nguyen, Anil D'Silva and Mark Porter
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
