uploads///Chart  Revenues

Bank of America’s Q3 Revenues Surpassed Wall Street Estimates

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Dec. 4 2020, Updated 10:53 a.m. ET

Third-quarter performance

Bank of America (BAC) reported third-quarter revenues of $22.8 billion, surpassing Wall Street’s forecast of $22.7 billion. Its quarterly revenues rose 4.0% YoY and ~1.0% sequentially. 

The company’s robust top-line performance was driven by higher interest rates, deposit growth, and loan growth. However, the decline in investment banking and trading revenues partially offset its overall top-line growth.

Bank of America’s (BAC) net interest income increased $709.0 million, or 6.0% YoY (year-over-year), to $11.9 billion. This increase resulted from increased spreads and growth in loans and deposits. 

This trend also led to an improvement in Bank of America’s net interest yield, which reached 2.42% in the third quarter. BAC’s net interest yield reflected a year-over-year increase of six basis points and a sequential increase of four basis points.

The bank’s total deposits increased by $42.0 billion, or 4.0% YoY, to ~$1.32 trillion. This growth reflected a 1.2% sequential increase. 

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Bank of America’s loan book grew just 0.3% year-over-year to $930.0 billion. The benefit from increased lending across its Consumer Banking, Wealth Management, and Commercial segments was almost entirely offset by weakness in its mortgage loans and a decline in loans to its market business customers.

Peer comparisons

Among the major banks (XLF), JPMorgan Chase (JPM) and Wells Fargo (WFC) surpassed Wall Street’s revenue expectations for the third quarter and marked YoY improvement. However, Citigroup’s (C) revenues lagged estimates and registered a marginal YoY decline.

Performance by segment

The Consumer Banking segment’s revenues increased 7.0% YoY to $9.4 billion, driven by a 10.0% increase in net interest income. However, this increase was partially offset by a modest decline in noninterest income. 

The Global Wealth and Investment Management segment’s revenues increased 4.0% YoY to $4.8 billion, supported by higher net interest income and asset management fees. This increase was partially offset by lower transactional revenues.

Revenues from Bank of America’s Global Banking business declined 5.0% to $4.7 billion. Lower investment banking fees and the negative impact of tax reform on certain tax-advantaged investments more than offset the benefit of higher net interest income. 

Bank of America’s Global Markets revenues slid 1.0% YoY to $3.8 billion due to investment banking fees and declining sales and trading revenues.

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