Bank of America Quarterly Profit Rises 58% on Higher Interest Income

Bank of America Quarterly Profit Rises 58% on Higher Interest Income

Bank of America Corp. third-quarter profit rose 58%, suggesting banks’ lending businesses are starting to improve from a pandemic slump.

The second-largest U.S. bank earned $7.69 billion, up from $4.88 billion a year earlier. Per-share earnings of 85 cents topped the 71 cents that analysts polled by FactSet had expected.

Revenue totaled $22.77 billion, up 12% from $20.34 billion a year ago. That beat analysts’ expectations for revenue of $21.68 billion.

Much of the country’s economic activity flows through Bank of America and its peers, offering a real-time view of how consumers and businesses are recovering from the pandemic.

The bank benefited from a rebound in net interest income, which includes the money it makes on loans and holdings of debt securities. Net interest income rose 10% from a year earlier to $11.1 billion.

Despite an improving economy, banks have had difficulty growing their loan books this year. JPMorgan Chase & Co. on Wednesday reported that its loan book was basically flat from the second quarter, but executives said they see signs that consumers and businesses have an increasing appetite for debt.

At Bank of America, outstanding loans and leases totaled $927.74 billion in the third quarter, up slightly from the second quarter but down 3% from a year earlier.

Noninterest income, which includes fees, rose 14% from a year earlier to $11.67 billion.

A boom in mergers and acquisitions helped lift investment banking fees, which rose 23% from a year earlier to $2.17 billion.

Adjusted trading revenue was $3.63 billion, up 9% from a year earlier.

Profit was also boosted by a release of cash that it had set aside to cover loan losses. So far, pandemic loan defaults have failed to materialize, prompting the bank to release $1.1 billion of its reserves. Net charge-offs halved from a year ago to $463 million.

Analysts and investors have also been keeping a close eye on expenses, which rose in recent quarters. Noninterest expenses were roughly flat from a year earlier at $14.44 billion.

Bank of America’s stock price, which is up 42% so far this year, traded nearly 3% higher premarket Thursday.

Bank earnings

Read more articles about companies closely tied to the economy, selected by WSJ editors.

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