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Bank of America reported better than expected third quarter earnings before the bell Thursday. $BAC is seeing surging investment banking lifted by record-high advisory fees and a $1.1 billion release of loan-loss reserves.&nbsp $BAC joined CitigroupJPMorgan Chase, Wells FargoGoldman Sachs reporting this week.

Bank of America Mortgage

Bank of America Corporation NYSE: BAC Reported Earnings Before Open Thursday

$0.85 Beat $0.71 EPS Forecast and $22.8 Beat $21.7 Billion Forecast in Revenue

Bank of America Consensus Expectations

Earnings Preview

  • Q3 2021 earnings release: before the opening bell; conference call: 9 a.m.

The bank reported quarterly net income rose 58% to $7.7 billion, or 85 cents per share vs. $0.71 expected and $0.51 a year ago. Revenue was $22.8 billion vs. $21.7 billion expected and $20.3 billion a year ago. Bank of America is the second-largest US bank and with record advisory fees. BAC released $1.1 billion in reserves and booked an income tax benefit of $624 million, which helped lift its results.

Rising interest rates has a positive effect on Bank of America earnings. US 10-year Treasury yield has recently been rising as investors are becoming more optimistic about the US economy. The benefit of a +100 basis points parallel shift up in interest rates is approximately $10.5 billion for BAC. 

 Big Banks Kick Off Third Quarter 2021 Earnings Season

The bank rally has been fueled by expectations for the economy reopening and infrastructure spending.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.  

Bank of America Corporation NYSE: BAC

Market Reaction: Pre-market $44.21 +1.07 (2.48%)

 Highlights

  • BofA global banking's 23% rise in investment banking fees to a near-record $2.2 billion, as advisory fees shot up 65% to a record high of $654 million.
  • Revenue for the third quarter rose 12% to $22.8 billion from $20.3 billion a year ago, from stronger revenue from investment banking, and sales and trading. Analysts had expected $21.7 billion in revenue.
  • Revenue in its global wealth and investment management rose 17% to $5.3 billion, driven by higher asset-management fees, and growth in loans and deposits.
  • The global markets business relatively underperformed, posting a 4% decline in revenue to $4.5 billion.
  • The bank's net interest income rose 10% to $11.1 billion, beating a StreetAccount estimate of $10.6 billion.
  • Bank of America's key consumer-banking segment posted a 10% jump in revenue to $8.8 billion, and a slight increase in net income from last quarter.

"Our businesses regained the organic customer growth momentum we saw before the pandemic," CEO Brian Moynihan said.

BAC Earnings Q3 2021

 

The second-biggest U.S. lender after J.P. Morgan Chase is among the most sensitive of large banks when it comes to changes in interest rates, according to analysts,  It is also the most exposed to the US economy. Warren Buffett's Berkshire Hathaway as its largest shareholder with a 12% stake.

 

 

 Source: BAC

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