Bank of America Navigates Profit Dip with Robust Investment Banking

Bank of America's Q3 profit fell as it paid more to retain deposits, yet its performance exceeded expectations due to strong investment banking and trading activities. Despite a decrease in net interest income, the bank's asset quality remained solid, and it experienced growth in several revenue streams.

Bank of America's third-quarter profits declined as the institution paid more to customers to keep their deposits. However, strong performance in investment banking and trading helped the results surpass estimates. Investment banking fees saw an 18% rise to $1.4 billion, fueled by recent increases in activity and client confidence.

Brian Moynihan, CEO, described the earnings as 'solid,' highlighting growth across investment banking, asset management, and sales and trading revenue. Mergers and acquisitions revival also boosted advisory fees, while recent Federal Reserve interest rate cuts could enhance deal-making opportunities, said CFO Alastair Borthwick.

Despite a 3% drop in net interest income, BofA's wealth and investment management revenue climbed 8%, with client balances increasing significantly. Higher interest rates pressured borrowers, prompting increased provisions for credit losses, yet the bank's asset quality remained strong, leading to a 2.4% premarket share rise.

(With inputs from agencies.)