Bank of America misses revenue estimates on lower interest rates

[CHARLOTTE] Bank of America missed Wall Street estimates for third-quarter revenue on Wednesday as the lender was squeezed by lower interest rates, and it set aside US$1.4 billion to meet future losses in its commercial loan portfolio.

Net interest income at the bank, a key measure of how much it can make from lending, sank 17 per cent, showing the effects of the US Federal Reserve's moves to slash interest rates to near-zero and promise to keep them there to help spur growth.

However, a tight lid on costs helped the bank beat profit expectations.

Charlotte, North Carolina-based Bank of America is especially vulnerable to rate movements because of the composition of its balance sheet.

The lender also posted weak results in its sales and trading arm, in stark contrast to JPMorgan and Citigroup, which on Tuesday reported a 30 per cent and 16 per cent rise in trading revenue, respectively.

The second largest US bank by assets posted an adjusted revenue of US$20.45 billion, compared with analysts' average estimate of US$20.81 billion, according to IBES data from Refinitiv.

Net income applicable to common shareholders fell 15.8 per cent to US$4.44 billion, or 51 cents per share, in the quarter ended Sept 30, but beat IBES estimates of 49 US cents as total non-operating expenses fell 5 per cent.

REUTERS