Bank of America joins peers in improving economic outlook

A stabilising US economy helped Bank of America report a bounce in third-quarter earnings, as credit costs fell towards pre-pandemic levels.

Net income of $4.9bn, or 51 cents per share, compared with $3.5bn in the second quarter, and $5.8bn in the same period in 2019. Wall Street analysts had expected 49 cents a share.

The key factor in the rebound was a big decline in provision for bad loans, at $1.4bn, down from $5.1bn the quarter before, following a trend set by JPMorgan Chase and Citigroup when they reported results on Tuesday.

Total revenue at the bank, at $20.3bn, was slightly short of what analysts had expected, and reflected continued pressure on margins as a result of falling interest rates. Net interest margin — the difference between the bank’s funding costs and its lending yields — was 1.7 per cent in the quarter, down from 2.4 per cent the year before.

The bank’s capital markets operations showed softer growth than JPMorgan and Citigroup, with fixed-income trading revenues increasing slightly from the year before and equities trading rising by 6 per cent. Investment banking fees were up 15 per cent from the year before.

BofA shares have fallen by 29 per cent year to date, slightly outperforming US banking indices.

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