Bank of America Corp’s profits surged 15% in the third quarter as higher United States interest rates boosted income from consumer banking and the lender also met its own target on cost control.
Shares of the No.2 US bank by assets rose about 1% in premarket trade on Friday.
Revenue rose across three of BofA’s four main businesses, with consumer banking up 10%. Global markets business revenue fell due to weak trading that is hurting the entire sector.
The bank also kept a tight leash on costs. Its efficiency ratio, which measures expenses as a percentage of revenues, came in at 60%, in line with management’s long-term target.
“Revenue across our four lines of business grew 4%, even with a challenging comparable quarter for trading,” Chief Executive Officer Brian Moynihan said.
Benefiting from higher Federal Reserve interest rates, the lender’s net interest income rose 9.4% to 11.16 billion dollars.
The Fed is widely expected to raise rates again in December.
BofA’s large stock of deposits and rate-sensitive mortgage securities make the lender particularly dependent on a rise in interest rates to boost profits.
BofA’s non-interest expenses fell 2.5% to 13.14billion dollars in the third quarter. The lender is working to reduce annual expenses to $53 billion in 2018 to boost profits.
Net income attributable to common shareholders rose to 5.12billion dollars in third quarter ended September 30 from 4.45 billion in the year-ago period.
Earnings per share rose to 48 cents and trumped analysts ‘average estimate of 45 cents per share.
Total revenue rose about 1% to 22.08 billion dollars.
Adjusted trading revenue fell 15%, with revenue from fixed income trading down 22%.
JPMorgan and Citigroup also reported declines in trading revenue on Thursday.