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Abu Dhabi, UAESunday 18 November 2018

Bank of America profits beat expectations

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

Brian Moynihan, CEO of the Bank of America. The bank has topped forecasts. Reuters
Brian Moynihan, CEO of the Bank of America. The bank has topped forecasts. Reuters

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.