By Ken Sweet
AP Business Writer
NEW YORK (AP) - Bank of America's third-quarter profits rose nearly 6 percent from a year earlier, helped by strong results in investment banking and trading as well as lower expenses. The profit growth came from all four of the bank's businesses and despite continuing low interest rates.
The consumer banking giant said Monday it earned $4.45 billion in the three months ending in September after paying dividends to preferred shareholders, up from $4.178 billion in the same period a year earlier.
The per-share figure rose to 41 cents versus 38 cents a year ago, easily beating the 34 cents per share analysts were expecting, according to FactSet.
BofA's consumer banking division earned $1.81 billion in the quarter, up from $1.76 billion from a year earlier. While revenue was relatively flat year over year, largely due to lingering effects of near-zero interest rates, BofA was able to cut expenses from $4.711 billion in the third quarter 2015 to $4.37 billion this quarter.
Investors took that as a positive sign, since BofA is primarily a U.S. consumer banking company that is more exposed to low interest rates than other banks with larger investment banking franchises.
Part of the cost savings came from closing branches and laying off staff. BofA's branch count fell to 4,629 in the quarter from 4,741 a year earlier. The number of full-time employees fell to 209,009 from 215,193.
Noting the ongoing Wells Fargo sales practices scandal, Bank of America executives said they have seen no evidence of similar behavior at their bank.
"It's not the number of products we open, it's how they are used," Paul Donofrio, Bank of America's chief financial officer, said in a call with reporters.
Bank of America's global markets division reported net income of $1.07 billion, up from $800 million a year earlier. BofA's bond trading desks had a strong quarter, up 39 percent from a year earlier. Citigroup and JPMorgan Chase had reported similar gains in bond trading last week.
BofA's balance sheet continued to recover as well. The bank's net charge-off ratio, or the proportion of loans the bank considers uncollectable, fell to 0.4 percent from 0.43 percent a year earlier. The portion of loans that are in arrears or in collections fell to 0.97 percent from 1.18 percent a year earlier.
Firm wide, revenue rose to $21.64 billion from $20.99 billion.
Published: Wed, Oct 19, 2016
