After a series of earnings report from financial and investment companies like JPMorgan and Citigroup this week, Bank of America also released its third-quarter earnings report that beat most analysts estimates.
The company posted earnings of 48 cents per share beating consensus estimates of 45 cents per share. Bank of America’s revenue also came at $22.07 billion beating by analysts forecasts of $21.97 billion.
Bank of America shares was up by 0.7% during the pre-market trading just after the company released their third-quarter earnings report.
However, the company, just like other banks in the United States posted a decline in their fixed-income trading revenue largely brought by the low volatility trading. Bank of America’s fixed-income trading revenue declined by 22% on a year over year basis and totaled to $2.152 billion for the third quarter compared to their fixed-income revenue of $2.646 billion during the same period last year. According to the bank, the slowdown was due to less favorable market conditions in credit-related products aside from the lower volatility in rates products. Despite this, their equities trading revenues fared slightly higher by 2% to $984 million.
Other financial stocks such as JPMorgan Chase & Co and Citigroup also posted a decline in their fixed income trading revenue. The two financial companies who posted their earnings report for the quarter that ended in September reported a decline of 27% and 11% respectively in their trading revenue.
While Citigroup’s trading revenue fell only 11% to $3.63 billion lower than their forecasted decline of 15%, JPMorgan’s fixed-income trading revenue came at $3.16 billion missing most estimates of $3.25 billion.
Bank of America’s net income rose from $5.2 billion during the second quarter to $5.6 billion for the third quarter. Their net interest income also jumped by 10% from the same period last year to $11.4 billion. Bank of America’s revenues from global banking was up by 5% to $5 billion. Their revenue from consumer banking also jumped by 10% to $8.8 billion while their wealth management revenue totaled to $4.6 billion representing an increase of 6%.
The bank also recorded their best third quarter performance following their acquisition of Merrill Lynch as their investment banking fees jumped by 1% to $1.5 billion.
Stocks and earnings of banks are expected to rise further due to the outlook regarding another interest rate hike from the U.S. Federal Reserve. Although the central bank is still debating whether the current inflation is enough to signal another rate hike by December, the majority of the markets remain mostly optimistic regarding the outlook.
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