BofA profit up on bond trading, cost-cutting
A boost from Wall Street trading and efforts to curb costs have helped Bank of America offset pressures caused by low interest rates and improve quarterly profits.
The second-biggest US bank by assets is regarded as among the most exposed in the sector to low interest rates, partly because of the scale of its retail business and deposit base. In the third quarter, however, the bank delivered net income of $4.96bn — up 7 per cent from a year ago.
Like its peers JPMorgan and Citigroup, Bank of America benefited from a trading boost during the quarter. Revenues in Global Markets rose 16 per cent as a 32 per cent improvement in fixed income trading helped compensate for a 17 per cent decline in equities. Corporate investment banking fees also rose, up 13 per cent.
Cost-cutting also helped. Brian Moynihan, chief executive for almost seven years and chairman for two, has sought to make Bank of America more efficient as part of efforts to boost its share price. In the summer he set out plans to cut about $3bn in costs by 2018. During the third quarter, non-interest expenses reduced $500m as the group’s headcount fell another 2,000 to 209,000.
The bank — based in Charlotte, North Carolina — has been doing more lending to compensate for a squeeze caused by low interest rates.
Overall net interest income rose 3 per cent from a year ago to $10.2bn. Bank of America’s total revenues rose from $21bn to $21.6bn.
Shares rose 1.5 per cent in pre-market trading. They have fallen 4.9 per cent this year, underperforming a 2.5 per cent dip in the KBW index of 24 US banks.