Bank of America has beaten estimates and posted earnings, much above estimates.
The earnings posted by BofA are at 66 cents a share, while estimates were at 62 cents per share.
The earnings per share for the third quarter have increased by 43 percent from the previous year, far exceeding analysts’ estimate.
However, the bank’s revenue saw a modest increase of 4 percent. It was an increase to $22.8 billion from its estimate of $22.67 billion.
Expenses were reduced to $13.1 billion which was a cut of 2 percent.
Consumer banking is an important division that has witnessed good growth. It has shown a profit of $3.1 billion, which is a staggering 49 percent jump. Profits have increased with improved credit and lower taxes. Loans have increased by 6 percent and deposits have increased by 4 percent, rising to $285 billion and $688 billion respectively.
However, shares of Bank of America have not increased on the positive news. The rise in interest rates and an expectation of a further hike is causing much concern among investors.
With the interest rate hike, the bank pays more to depositors but gets increased charges from borrower’s loans. The net interest margin of the bank has also increased. The difference between the amount to be received from borrowers and the amount payable on deposits, known as the net interest has increased to 2.42 percent points, this quarter.
Bank of America has paid less tax this quarter. The pre-tax profits have increased by $1.3 billion, this quarter. The amount set aside towards payment of taxes has fallen by $30 million.
The CEO of Bank of America has said that the US economy is showing responsible growth and a healthy US consumer growth. This has enabled the banks to deliver good pre-tax earnings for this quarter.
JPMorgan and Citigroup beat estimates on earnings, while Wells Fargo shows better reports on revenue.