Bank of America (BofA) beat Wall Street expectations with strong third-quarter performance and revised its interest income forecast upward. The bank’s investment banking unit recorded significant revenue growth thanks to increased merger and acquisition activity.
The second-largest bank in the U.S. expects net interest income (NII) for the fourth quarter to be between $15.6 and $15.7 billion. This represents an increase of approximately 8% year-over-year. The 25 basis point interest rate cut by the Federal Reserve (Fed) in September could further boost credit demand. The bank’s shares gained 4% in pre-market trading following the announcement. Investment banking fees increased by 43% year-on-year to $2 billion. This is well above the 10-15% range previously predicted by executives. The volume of global mergers and acquisitions (M&A) also increased by 40% to $1.26 trillion during the same period. Net interest income, that is, the difference in interest the bank earns from loans and pays to depositors, increased by 9% to $15.2 billion compared to a year earlier. CEO Brian Moynihan stated the following in his announcement:
“Our balanced balance sheet management, coupled with strong loan and deposit growth, enabled us to achieve historic interest income.”
Bank of America reported $8.5 billion in net profit for the three-month period ended September 30; this translates to $1.06 per share. Last year, during the same period, this figure was $6.9 billion ($0.81 per share).
Analyst expectations were for a profit of $0.95.
Although the bank reported strong results this quarter, its shares are expected to underperform the sector average throughout 2025.
