NEW YORK (AP) — Bank of America's third-quarter profits jumped 13 percent, the bank said Friday, helped by higher interest rates and an increase in lending.
The Charlotte-based bank said it earned $5.59 billion in the third quarter, or 48 cents per share, compared with $4.96 billion, or 41 cents per share, in the same period year ago. The results beat Wall Street analysts' expectations, which were looking for a profit of 46 cents per share, according to FactSet.
Bank of America's consumer banking division had a solid quarter, reflecting the trend up in interest rates in the past year, which has allowed banks like BofA to charge more to borrow. Net interest income was up 9 percent. The bank also increased its number of loans outstanding, which brought in additional interest income as well.
Like JPMorgan Chase and Citigroup, which reported their quarterly results on Thursday, Bank of America saw a slowdown on its trading desks, which hurt the results of its investment banking division. Sales and trading revenue fell 13 percent year-over-year, with that decline being primarily tied to a drop in trading revenue for its fixed income, currencies and commodities desks.
Also like its two competitors, Bank of America had to set aside some additional money to cover soured credit card loans. Delinquencies in credit cards have been trending upward in the last several quarters, despite record low unemployment, and nearly every bank has said they have had to provision more money for potential losses.
Along with growing revenue through higher interest rates, Bank of America was able to cut its expenses. Since the financial crisis, Bank of America has been in a multi-year turnaround plan which has started to pay dividends for management. BofA's efficiency ratio, which is how much a bank like BofA spends on overhead to do business, decreased to 60 percent from 62 percent a year earlier.
Quarterly revenue across the company reached $22.83 billion, which also beat analysts' forecasts of $22.02 billion.
Bank of America shares were about 1 percent in midday trading to $25.70. Shares are up roughly 17 percent so far this year.