Bank of America Posts Better-Than-Expected Profit on High Interest Rates

Interest rate hikes by the Federal Reserve to bring down inflation helped Bank of America (BAC) post better-than-expected results, and shares rose over 1% in early trading on Tuesday.

Bank of America reported third quarter fiscal 2023 profit jumped 10% to $7.8 billion, or $0.90 per share. Revenue, net of interest expense, increased 2.3% to $25.2 billion. Both were above forecasts.

Interest income was up 4.5% to $14.4 billion, which the bank said was driven by higher interest rates and loan growth. Non-interest income added 0.05% to $10.8 billion as higher sales and trading revenue as well as asset management fees offset income declines elsewhere.

The bank indicated that average loan and lease balances were $1 trillion, an gain of 1%, lifted by rising credit card balances. Average deposit balances were $1.9 trillion, a gain of $1 billion from the second quarter, but a drop of $87 billion from a year ago. 

CEO Brian Moynihan said Bank of America added clients across all its businesses, even with a slowing economy and a pullback in consumer spending. CFO Alastair Borthwick added that the company “remained disciplined and decreased expenses for the second consecutive quarter while continuing to invest in our franchise.”

Earlier this month, shares of Bank of America hit a nearly three-year low, and although they’ve made some gains since then, they are still down for the year.