Bank of America Faces Profit Downturn Amid Rising Interest Rates

Bank of America reported a decline in third-quarter profit, primarily due to reduced income from customer interest payments. As the bank increased interest rates to retain deposits, its net interest income fell by 3%. Meanwhile, credit loss provisions rose, and investment banking fees grew by 18%.

On Tuesday, Bank of America announced a decrease in third-quarter profits, attributing the decline to a reduction in income from customer interest payments. The ongoing competitive climate has compelled banks to raise interest rates on deposits, impacting net interest income.

The bank's net interest income witnessed a 3% dip, landing at $14 billion, in stark contrast to competitors JPMorgan Chase and Wells Fargo, which exceeded expectations in their recent earnings reports. Bank of America's shares slipped by 0.3% in premarket trading.

Meanwhile, the bank's provisions for credit losses escalated to $1.5 billion from last year's $1.2 billion, reflecting increased risk of defaults. Despite these challenges, Wall Street experienced a boost with rising advisory fees from revived mergers and acquisitions, as Bank of America's investment banking fees rose by 18%, reaching $1.4 billion compared to the previous year.

(With inputs from agencies.)