Bank of America said Wednesday that its third-quarter profit fell 17% from a year earlier as a $1.2 billion regulatory penalty and a slowdown in its Wall Street machine dampened its growth in loan revenue.
Bank of America (BAC) stock fell more than 3% in premarket trading.
The country’s second-largest bank reported third-quarter net income of $6.93 billion, or $0.91 per share, compared with analysts’ expectations of $1.10 per share. “Excluding regulatory penalties, Bank of America said it earned $8.1 billion, or $1.08 per share, with adjusted earnings per share up 4% from a year earlier.
Revenue rose 3% to $30 billion, compared with expectations of around $30.6 billion.
U.S. regulators on Tuesday afternoon fined the Charlotte, North Carolina-based bank $1.2 billion for widespread failures in measures to protect the banking giant against money laundering and other illicit financial activities.
Excluding regulatory penalties, Bank of America said it earned $8.1 billion, or $1.08 per share.
“While investment banking and sales and trading revenues were down, commercial lending increased across all customer segments,” Bank of America CEO Brian Moynihan said in an accompanying statement.
“Our momentum, reflected by growth in customer deposits, wealth flows and consumer activity, has supported strong earnings, balance sheet growth and long-term shareholder value,” he added.
The results also offered another glimpse into how America’s biggest banks coped with soaring borrowing costs, which supported a surge in loan revenue while complicating their profit machines on Wall Street.
Bank of America’s net interest income, a key measure of how much the bank earns from its loans, rose 8% year over year to $16.4 billion, supported by higher loan and deposit balances.
At the same time, investment banking fees fell 11% from a year earlier, to $1.8 billion, while beating analysts’ forecasts after CEO Moynihan telegraphed the bank’s relatively quieter time for deal-making.
Fixed-income trading revenue fell 17% from last year to $2.6 billion, offsetting an 11% increase in equity trading revenue to $2.5 billion.
“We have seen healthy activity from our consumer, wealth manager, business and commercial clients,” Bank of America Chief Financial Officer Alastair Borthwick said in a statement accompanying the release.
David Hollerith covers a range of developments across the financial industry, from Wall Street to banking and asset management to crypto and fintech. Email him at david.hollerith@yahoofinance.com. Follow him on X at @DsHollers.
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