Bank of America (BAC) -) posted better-than-expected third quarter earnings Tuesday, thanks to solid gains in net interest income from its lending business, but noted a big jump in unrealized losses in its bond portfolio.
Bank of America said earnings for the three months ending in September came in at 90 cents per share, up 11.1% from the same period last year 8 cents ahead of the Street consensus forecast. Group revenues, Bank of America said, were 2% higher than last year at $25.2 billion once interest expenses were stripped out, a tally that largely matched analysts' forecasts.
Net interest income, a key measure of bank profitability, rose 4% to $14.4 billion, the bank said, while investment banking fees, Bank of America said, rose 2% to $1.2 billion. Consumer banking revenues, by far the larger portion of the lender's top line, rose 6% to $10.5 billion, while its overall deposit base was pegged at $9.1 trillion.
Another key figure for the bank was the unrealized losses in its bond portfolio, which jumped 24% from the second quarter to $131.6 billion amid the surge in Treasury yields – which pushed market prices lower – over the final two months of the quarter.
“Our teammates delivered another strong quarter. We generated $7.8 billion in earnings, up 10 percent from the third quarter a year ago. We added clients and accounts across all lines of business," said CEO Brian Moynihan.
"We did this in a healthy but slowing economy that saw US consumer spending still ahead of last year but continuing to slow," he added. "Our growth in revenue and earnings allowed us to continue our investments in our people and technology to drive an enhanced client experience.”
Bank of America shares were marked 0.20% higher in early trading immediately following the earnings release to change hands at $27.04 each.
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