Bank of America Q3 earnings beat, aided by strong wealth, markets results

While Bank of America’s (NYSE:BAC) Q3 earnings declined from both the previous and year-ago quarters, they topped the Wall Street consensus, bolstered by net income gains in its Global Markets and Global Wealth and Investment Management businesses.

Its provision for credit losses climbed from both the prior quarter and the year-ago period.

“Net interest income increased over the second quarter, complemented by double-digit, year-over-year growth in investment banking and asset management fees, as well as sales and trading revenue,” said Chair and CEO Brian Moynihan. “We also continue to benefit from our investments in the business.”

Q3 EPS of $0.81, vs. the average analyst estimate of $0.78, fell from $0.83 in Q2 and $0.90 in last year’s Q3.

Net interest income (FTE basis) of $14.1B, vs. the Visible Alpha estimate of $14.0B, grew from $13.9B in the prior quarter and dipped from $14.5B a year ago.

Bank of America (BAC) stock rose 2.2% in Tuesday premarket trading at 8:14 AM ET.

“Bank of America surprised with much stronger than expected profits, while revenues were marginally higher than expected,” said Jonathan Weber, Investing Group Leader of Cash Flow Club. “The bank‘s Global Markets results showed excellent year-over-year growth of almost 14%, with growth accelerating further from the previous quarter’s already strong level of 12%. Based on these results, the market‘s positive reaction in early trading seems justified.”

Noninterest income of $11.4B, topping the $11.3B Visible Alpha consensus, decreased from $11.7B in Q2 and increased from $10.8B in Q3 2023.

Provision for credit losses rose to $1.54B from $1.51B in the previous quarter and $1.23B in the year-ago period.

Q3 noninterest expense was $16.5B, up from $16.3B in Q2 and $15.8B in last year’s Q3.

Bank of America’s (BAC) return on average tangible common shareholders’ equity was 12.8% vs. 13.6% in the previous quarter and 15.5% a year ago.

Average deposits were $1.92T, vs. $1.91T in Q2.

Average loans of $1.06T vs. $1.05T in the prior quarter.

Consumer Banking revenue was $10.4B vs. 10.2B in Q2 and $10.5B in Q3 2023; net income of $2.69B increased from $2.60B in the prior quarter and fell from $2.86B a year ago. Average deposits declined to $938.4B from $949.2B in Q2. Combined credit/debit card spending of $231.9B rose 3% Y/Y.

Global Wealth and Investment Management revenue of $5.76B climbed from $5.57B in Q2 and $5.32B in Q3 2023. Net income of $1.06B vs. $1.03B in the prior quarter and $1.03B a year ago. Client balances of $4.19T rose 18% Y/Y, driven by higher market valuations and positive net client flows.

Global Banking revenue of $5.83B slipped from $6.05B in the previous quarter and climbed from $6.20B a year ago. Net income of $1.90B dropped from $2.12B in Q2 and $2.57B in last year’s Q3. Average deposits of $549.6B grew 9% Y/Y and average loans and leases of $371B slipped by 1% Y/Y.

Global Markets revenue of $5.63B increased from $5.46B in the prior quarter and $4.94B a year ago; net income (ex-DVA) was $1.55B vs. $1.41B in the prior quarter and $1.26B a year ago. Sales and trading revenue, excluding net DVA, of $4.9B rose 12% Y/Y.

Conference call at 8:30 AM ET.

Earlier, Bank of America GAAP EPS of $0.81 beats by $0.05, revenue of $25.3B beats by $70M