Bank of America posts profit for 4 quarters in a row
Distancing from the impact of financial crisis, Bank of America (BofA) has posted positive numbers for the third quarter making its fourth consecutive quarter with profits. The Charlotte-based bank posted a net profit of $4.07bn for the third quarter. Despite its pedestrian performance in the third quarter ending September 2015, the bank has been able to post profits for the last four quarters. This is considered to be encouraging for the shareholders of $2.2trillion bank. The North America's second largest bank by assets suffered a drop of 2.5 percent in revenues owing lower interest rates. This resulted in 6.9 percent drop in net interest income.
The net interest income accounts for 46 percent of the total bank's revenues. Since in fourth quarter of 2014, the bank earned a combined profit of $16.2billion for the first time since the financial crisis in 2008.
Last year Bank of America settled $16.65bn lawsuit with the US Department of Justice and this amounted to $5.3bn pre-tax charge. This came to $200mn in the third quarter resulting in more pre-tax earnings, which rose to $6.1bn in the third quarter from $431mn in the third quarter of 2014.
Reflecting 37cents a share, the bank recorded a net profit of $4.07bn for the third quarter as against the loss of $470mn in the previous corresponding quarter. The consumer banking division registered five percent to $1.8bn, while residential mortgage lending grew 13 percent to $17bn.
Brian Moynihan, Chief Executive, Bank of America, said: "The key drivers of our business deposit taking and lending to both our consumer and corporate clients remained fairly stable in challenging capital markets conditions."
The deposits were up four percent or $50bn to $1.16 trillion. The year-to-date (YTD) net income has been $13.2bn giving $1.09 per diluted share. The quarterly results indicate the improving operating leverage while the bank continues to invest in the business, said chief financial officer Paul Donofrio.
Further elaborating on bank's performance, Moynihan said: "We saw solid results this quarter by continuing to execute our long-term strategy. The key drivers of our business -- deposit taking and lending to both our consumer and corporate clients -- moved in the right direction this quarter and our trading results on behalf of clients remained fairly stable in challenging capital markets conditions. Our balanced approach to serving customers and clients is on track as the economy continues to move forward."
Bank of America has surpassed the market expectations for two quarters in a row. Investors gains hope on the future course of the bank's performance. Contrary to banking shares, BofA stock was trading higher on the Wall Street for the most of the week. The share price was hovering at $16.14 on NYSE. Despite tough revenue situation, low-interest rates and sluggish recovery of economy BoA is able to perform better way beating the market odds.