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Bank of America’s quarterly profits rise 58% with high interest income

Bank of America Corp.’s third-quarter profit increased 58%. This suggests that the bank’s lending business is beginning to improve from the pandemic downturn.

Revenues from the second largest bank in the United States increased from $ 4.88 billion in the previous year to $ 7.69 billion. Eighty-five cents per share exceeded what FactSet polled analysts expected, 71 cents.

Revenues totaled $ 22.77 billion, an increase of 12% from $ 20.34 billion in the previous year. This exceeded analysts’ expectations for $ 21.68 billion in revenue.

Much of the country’s economic activity flows through Bank of America and its peers, giving you a real-time view of how consumers and businesses are recovering from a pandemic. Banks said consumers and small business customers are spending well above pre-pandemic levels.

Banks have benefited from a recovery in net interest income, including money earned from holding debt securities such as loans and mortgage-backed securities. Net interest income was $ 11.1 billion, up 10% year-over-year.

Despite the economic improvement, banks I had a hard time increasing the number of loan books This year. JP Morgan Chase & Co.On Wednesday, the loan book It was basically flat from the second quarterBut executives said they are seeing signs that consumers and businesses are increasing their desire for debt.

At Bank of America, loan and lease balances totaled $ 927.74 billion at the end of the third quarter, a slight increase from the second quarter, but a 3% year-on-year decrease.Without government outflow Paycheck protection program loan, Bank loan books were up almost 2% from the second quarter.

Commercial lending in the US and abroad has skyrocketed since a year ago. In addition, more people have borrowed into their stock portfolio. Securities-based loans to wealth management clients have increased by about a quarter over the past year.

“We expect an increase in loans for all of our products,” Paul Donofrio, chief financial officer of the bank, said in a call to reporters Thursday.

Non-interest income, including fees, increased 14% year-over-year to $ 11.67 billion.

The M & A boom has helped raise investment banking fees. That was $ 2.17 billion, up 23% from the previous year.Bank of America Investment Bank Often lags behind peersHowever, D’Onofrio said the trading pipeline remained strong into the fourth quarter.

Adjusted transaction revenue was $ 3.63 billion, an increase of 9% over the previous year.

Profit was also boosted by the release of cash set aside to cover bad debt losses. So far, the pandemic loan default has not been achieved and banks are being urged to release a $ 1.1 billion reserve. Net depreciation has halved from a year ago to $ 436 million.

Analysts and investors are also paying attention to the expenses that have increased in the last quarter. Non-interest expenses were $ 14.44 billion, almost flat from the year-ago quarter.

Bank of America shares have risen about 45% so far this year, up 2.4% on Thursday morning trading.

Bank earnings

Read more articles about companies that are closely related to the economy, selected by the WSJ editors.

Write to Ben Eisen ben.eisen@wsj.com

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Bank of America’s quarterly profits rise 58% with high interest income

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