Bank of America profits beat expectations

Net income applicable to common shareholders rose 35 per cent to $6.7bn in the third quarter

FILE PHOTO: Brian T. Moynihan, Chief Executive Officer of the Bank of America Corporation, in Davos in January 2018. REUTERS/Denis Balibouse/File Photo
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Bank of America  reported a better than expected rise in quarterly profit on Monday as the second-largest US lender benefited from cost cuts, while higher interest rates and loan growth helped offset weaker bond trading revenue.

In his near-decade long tenure as chief executive officer, Brian Moynihan has tried to streamline the lender's sprawling operations by cutting jobs, digitising retail operations and getting rid of crisis-era mortgages, which he inherited as part of its acquisition of Countrywide Financial.

Two years ago, Mr Moynihan pledged to cut expenses to $53 billion by the end of this year and stick to that level until 2020.

Non-interest expense fell 2.4 per cent to $13.07bn in the third quarter, in part due to a 2 per cent cut in headcount across businesses.

"Responsible growth, backed by a solid US economy and a healthy US consumer, combined to deliver the highest quarterly pre-tax earnings in our company's history," Mr Moynihan said.

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Net income applicable to common shareholders rose 35 per cent to $6.7bn in the third quarter ended September 30.

Excluding items, the bank earned 67 cents per share, beating the average analyst estimate of 62 cents per share, according to I/B/E/S data from Refinitiv.

Loans in its consumer banking business grew 6 percent to $285bn. Total deposits rose about 5 per cent to $1.35 trillion.

BofA relies heavily on higher interest rates to maximise profits as it has a large deposit pool and rate-sensitive mortgage securities.

Total interest income - the difference between what a lender earns on loans and pays on deposits - rose 6.4 per cent to $11.87bn.