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Bank of America's Q3 Results Beat, Miss Forecasts

Jackie Bennion, Deputy Editor, October 15, 2020


The global bank missed on revenues and reported a 17 per cent drop in net interest income.

Bank of America yesterday said that third-quarter group revenues fell by 11 per cent year-over-year to $20.45 billion, just shy of Wall Street expectations.

Profit fell by 16 per cent year-on-year to $4.9 billion in Q3, and earnings of $0.51 per share slipped by 9 per cent, but beat analysts forecasts of 49 cents. This compares with $3.5 billion or $0.37 reported in Q2. Most revealing was the fall in net interest income dropping by 17 per cent from the same period last year to $10.1 billion on forecasts of $10.5 billon. The bank ended the quarter with a capital ratio of 11.9 per cent, above the 9.5 per cent minimum.

Explaining results that largely missed expectations and sent the stock down by around 2 per cent on a decline of around 30 per cent already this year, CEO Brian Moynihan said: “Our wealth management business showed once again why it is an industry leader in providing timely advice and guidance to clients, and our global banking and global markets businesses continued to support the global economy by helping clients raise capital, manage risk and increase liquidity.”

The bank ended the quarter with little change from Q2 at $2.7 trillion in total assets.

Alongside other Q3 results being announced this week, provisioning against bad loans has been closely watched. Banks so far are coming off historic provisioning in June as economies have begun to recover from the near total lockdowns imposed in March and April. BoA’s provisioning has moved from $5.1 billion set aside for April to June to $1.39 billion registered at the end of September.

“As the economy continues to recover, we generated nearly $5 billion in earnings this quarter reflecting the diversity of our business model, our industry-leading market position and digital capabilities, and our adherence to responsible growth,” Monyihan said.

BoA's wealth arm Merrill Lynch reported client balances up by 5 per cent year-on-year, but an 8 per cent year-on-year decline in revenue for the group at $3.7 billion.

In private banking, client balances were up by 7 per cent year-on-year to $496 billion. Assets under management also rose by 5 per cent year-on-year to $289 billion. But revenues were down by 6 per cent year-on-year to $798 million as the impact of lower rates more than offset deposits, loan and AuM growth, the bank said.

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