Bank of America Outperforms Expectations Despite Profit Drop

Bank of America's third-quarter profit fell due to increased costs for holding deposits, yet exceeded forecasts owing to strong investment banking and trading. Investment banking fees rose 18% to $1.4 billion. Net interest income slightly climbed from the previous quarter. The bank's shares rose 2.6% following the earnings update.

Bank of America's third-quarter profit experienced a decline as the company paid more to retain customer deposits. However, the earnings surpassed expectations, driven by robust performance in investment banking and trading sectors. Investment banking fees saw an 18% increase to $1.4 billion, reflecting growing client confidence and increased debt and equity issuance.

Chief Financial Officer Alastair Borthwick noted that customer deposit balances and asset quality remained strong, suggesting growth opportunities ahead. CEO Brian Moynihan described the earnings as "solid," citing gains in investment banking, asset management fees, and sales and trading revenue. Advisory fees also improved, aided by a resurgence in mergers and acquisitions.

BofA's underwriting income surged 39.7% during the quarter. Sales and trading revenue rose 12% to $4.9 billion, marking the tenth consecutive quarter of year-on-year growth, driven by a buoyant equities market. Despite a slight 3% year-on-year decrease, net interest income represented an upward shift from the prior quarter.

(With inputs from agencies.)