Bank of America reports $8.5 billion Q3 profit, up 23% from a year ago

Bank of America came in loud this Wednesday, reporting an $8.5 billion profit for the third quarter, up by 23% from last year. That came out to $1.06 per share, blowing past the 95 cents analysts were expecting, according to LSEG.

Revenue wasn’t left behind either, jumping 10.8% year-on-year to $28.24 billion, also above the $27.5 billion forecast. No confusion here: every line beat the Street.

Investors didn’t wait around. BoFA’s stock jumped by 6.8% at market open, according to data from Google Finance.

The stock was already up 14% year-to-date before the report even hit. And it’s clear why. The second-largest U.S. bank by assets rode strong waves across Wall Street activity.

Both investment banking and trading desks pushed the numbers hard; the same trend was seen at JPMorgan Chase and Goldman Sachs, which also booked big trading gains this quarter.

Banking fees jump while trading revenue climbs

Bank of America said its investment banking fees hit $2 billion, a 43% increase from last year. That’s $380 million more than what analysts at StreetAccount expected. Deals and capital raises picked up speed, and the bank cashed in.

Meanwhile, equities trading pulled in $2.3 billion, a 14% boost, topping expectations by around $200 million.

Fixed income trading didn’t miss either. That line came in at $3.1 billion, rising 5% from the previous year—right in line with what was forecast. The entire trading unit ran clean this quarter, with no part dragging the score down.

Credit performance also helped. Provision for credit losses dropped to $1.3 billion, a 13% decline from last quarter and $280 million below analyst forecasts. That change was big for earnings, as it means fewer borrowers are falling behind, which means less cash needs to be set aside to cover future bad loans.

At the same time, net interest income hit $15.39 billion, up 9% and about $150 million over expectations. CEO Brian Moynihan said in the earnings release:

“With continued organic growth, every line of business reported top and bottom-line improvements. Strong loan and deposit growth, coupled with effective balance sheet positioning, resulted in record net interest income.”

Balance sheet changes and capital ratios hold steady

At quarter-end, Bank of America had $3.4 trillion in total assets, slightly down from $3.44 trillion in Q2, but still above the $3.32 trillion from the same time last year.

Total loans and leases rose to $1.17 trillion, up from $1.15 trillion in Q2 and $1.08 trillion a year ago. Of that, $1.16 trillion came from business segments alone, not including other units.

Deposits held up too. They stood at $2.0 trillion, barely down from Q2’s $2.01 trillion, but up from $1.93 trillion in Q3 last year. On average, assets clocked in at $3.44 trillion, loans and leases at $1.15 trillion, and deposits at $1.99 trillion.

The bank also reported $311.5 billion in long-term debt and $961 billion in average global liquidity. Common equity climbed to $278.2 billion, while book value per share rose to $37.95. The tangible book value moved up to $28.39 per share.

Regulatory capital levels remained solid. The CET1 capital stood at $202.9 billion, with a CET1 ratio of 11.6% under the standardized approach and 13.1% under the advanced one. The Supplementary Leverage Ratio was at 5.8%, a small increase from 5.7% last quarter.

As for shares, there were 7.33 billion common shares outstanding at the end of Q3. That’s down from 7.44 billion in Q2 and 7.69 billion in Q3 last year.

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