Bank of America (BAC.N) recorded a 10% increase in profit during the third quarter, aligning with its competitors who have seen a rise in earnings from interest payments made by their customers. Additionally, Bank of America investment banking and trading segments performed better than initially anticipated.
On Tuesday, the second-largest U.S. bank unveiled a net income of $7.8 billion, equivalent to 90 cents per share, resulting in a 0.5% increase in premarket trading for their shares.
CEO Brian Moynihan stated, “We attracted new clients and expanded our accounts across all business lines. “We achieved this in a robust, although the economy is decelerating, with U.S. consumer spending staying ahead of last year but slowing down progressively.”
Bank of America investment banking and trading divisions outperformed Wall Street expectations, reporting higher revenue, which defied the overall industry’s downturn. Total investment banking fees grew by 2% to reach $1.2 billion, while sales and trading revenue experienced an 8% increase, totaling $4.4 billion in the third quarter.
Concurrently, lenders experienced a boost in interest income due to their ability to charge higher interest rates on loans following the Federal Reserve’s actions to combat inflation by raising borrowing costs. In the third quarter, Bank of America’s net interest income (NII) increased by 4% to reach $14.4 billion.
Notably, financial institutions like JPMorgan Chase (JPM.N), Citigroup (C.N), and Wells Fargo (WFC.N) also reported a surge in NII last Friday and subsequently raised their forecasts for this crucial metric. American consumers, who maintain healthy household finances and continue to use their credit cards for spending, have actively supported the robust interest income across the sector, even in the face of an impending economic slowdown.