Bank of America Q3 Earnings: Profit Drops 12% On Loan Loss Provisions, Investment Banking Fees Soar 18%

Bank of America Corp BAC reported a third-quarter fiscal 2024 net income of $6.9 billion and EPS of $0.81, beating the analyst consensus estimate of $0.77. Net income fell 12% year-on-year due to higher provisions for loan losses and rising expenses.

Revenue, net of interest expense, increased 1.0% year over year to $25.49 billion, beating the analyst consensus estimate of $25.29 billion.

Also Read: JPMorgan Chase Q3 Earnings: Investment Banking Revenue Soars 29%, Largest Bank Raises Net Interest Income Outlook.

The gains in trading revenue, asset management, and investment banking fees offset the decline in net interest income. The stock gained after the quarterly print.

Segment Net income: Consumer Banking $2.69 billion vs. $2.86 billion Y/Y, Global Wealth and Investment Management $1.06 billion vs. $1.03 billion Y/Y, Global Banking $1.9 billion vs. $2.6 billion Y/Y, and Global Markets $1.55 billion vs. $1.26 billion Y/Y.

Investment banking fees grew by 18% to $1.40 billion. The Net interest income was $14.1 billion (-3.0% Y/Y), as higher asset yields and loan growth were more than offset by higher deposit costs. Noninterest income was $11.4 billion (+5.5% Y/Y). Provision for credit losses was flat Y/Y at $1.5 billion.

The efficiency ratio for the quarter was 64.64% vs. 62.55% Y/Y. The bank reported a CET1 ratio of 11.8%, up 112 bps from a year ago. The book value per share of $35.37 improved by 8%.

The average loan and lease balance was $1.06 trillion (+1.0% Y/Y). Average deposits are up 2% Y/Y to $1.92 trillion. Bank of America added ~1.0 million credit card accounts during the quarter.

Outlook: In the second quarter, Bank of America said it expects net interest income of ~$14.50 billion in the fourth quarter, assuming a 25 bps interest rate cut.

Bank of America stock gained over 55% in the last 12 months.

In September, the U.S. Fed cut the lending rate by 50 bps, lowering the central bank's benchmark rate to 4.75%-5% to spur demand. This could pose a tailwind for banks through cheaper borrowing rates and promoting lending activities.

Price Action: BAC stock is up 2.10% at $42.79 premarket at the last check Tuesday.

Also Read:

• Goldman Sachs Q3 Earnings: Investment Banking Fees Surges 20%, Asset & Wealth Management Up 16%, But Fixed Income Falters

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