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Bank of America profit beats on lower costs, loan growth
[BENGALURU] Bank of America Corp reported a better-than-expected rise in quarterly profit on Monday as the second-largest US lender benefited from cost cuts, while higher interest rates and loan growth helped offset weaker bond trading revenue.
In his near-decade long tenure as chief executive officer, Brian Moynihan has tried to streamline the lender's sprawling operations by cutting jobs, digitizing retail operations and getting rid of crisis-era mortgages, which he inherited as part of its acquisition of Countrywide Financial.
Two years ago, Moynihan pledged to cut expenses to US$53 billion by the end of this year and stick to that level until 2020.
Non-interest expense fell 2.4 per cent to US$13.07 billion in the third quarter, in part due to a 2 per cent cut in headcount across businesses.
"Responsible growth, backed by a solid US economy and a healthy US consumer, combined to deliver the highest quarterly pre-tax earnings in our company's history," Moynihan said in a statement.
Net income applicable to common shareholders rose 35 per cent to US$6.7 billion in the third quarter ended Sept 30.
Excluding items, the bank earned 67 cents per share, beating the average analyst estimate of 62 cents per share, according to I/B/E/S data from Refinitiv.
Loans in its consumer banking business grew 6 per cent to US$285 billion. Total deposits rose about 5 per cent to US$1.35 trillion.
BofA relies heavily on higher interest rates to maximize profits as it has a large deposit pool and rate-sensitive mortgage securities.
Total interest income - the difference between what a lender earns on loans and pays on deposits - rose 6.4 per cent to US$11.87 billion.
Shares of the company were up 0.7 per cent at US$28.66 in early trading.