Consumer banking powers BofA profit beat
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(Reuters) – Bank of America Corp’s (BAC.N) profit surged 15 percent in the third quarter as higher U.S. interest rates boosted income from consumer banking and the lender also met its own target on cost control.
Shares of the No.2 U.S. bank by assets rose about 1 percent in premarket trade on Friday.
The bank also kept a tight leash on costs. Its efficiency ratio, which measures expenses as a percentage of revenues, came in at 60 percent – in line with management’s long-term target.
“Revenue across our four lines of business grew 4 percent, even with a challenging comparable quarter for trading,” Chief Executive Officer Brian Moynihan said.
Benefiting from higher Federal Reserve interest rates, the lender’s net interest income rose 9.4 percent to $11.16 billion. The Fed is widely expected to raise rates again in December.
BofA’s large stock of deposits and rate-sensitive mortgage securities make the lender particularly dependent on a rise in interest rates to boost profits.
BofA’s non-interest expenses fell 2.5 percent to $13.14 billion in the third quarter. The lender is working to reduce annual expenses to $53 billion in 2018 to boost profits.
Net income attributable to common shareholders rose to $5.12 billion in third quarter ended Sept. 30 from $4.45 billion in the year-ago period. (bit.ly/2hDYUZK)
Earnings per share rose to 48 cents and trumped analysts’ average estimate of 45 cents per share.
Total revenue rose about 1 percent to $22.08 billion.
Reporting by Nikhil Subba and Sweta Singh in Bengaluru and Dan Freed in New York; editing by Saumyadeb Chakrabarty