Strong Q3 performance by the financials continues as BAC beats top and bottom line expectations
Bank of America (BAC) reported Q3 earnings that exceeded analyst expectations, with EPS of $0.81, beating the FactSet consensus by $0.05, and revenue of $25.3 billion, slightly above the consensus of $25.27 billion. Net interest income (NII) came in at $14.0 billion, down 3% year-over-year but up 2% sequentially, driven by fixed-rate asset repricing. The bank’s trading revenue, also outperformed, with equities trading revenue of $2.0 billion (versus $1.81 billion expected) and fixed income, currencies, and commodities (FICC) trading revenue of $2.94 billion (versus $2.77 billion expected).
Shares of BAC have edged up through $42 in reaction to the news. The banking giant is up 5% since last Friday as banking results have provided a tailwind to bulls. The July high of $44.44 which was set shortly after its Q2 results, looms as a key resistance area for bulls to fight through.

Key business segments delivered strong performances. Wealth and investment management revenue reached $5.76 billion, above expectations of $5.63 billion, supported by double-digit growth in investment banking and asset management fees. Sales and trading revenue was a standout, rising 12% year-over-year to $4.94 billion, marking the tenth consecutive quarter of year-over-year growth. Additionally, investment banking revenue of $1.40 billion exceeded estimates of $1.24 billion, benefiting from a stronger M&A market and capital raising activities.
On the credit front, Bank of America's provision for credit losses came in at $1.5 billion, in line with estimates but up from $1.2 billion in the same quarter last year, reflecting an increase in net charge-offs. Total net charge-offs were $1.5 billion, flat from Q2, but consumer charge-offs slightly decreased due to lower credit card losses. The bank also recorded a small net reserve build of $8 million in Q3, a reversal from a reserve release of $25 million in Q2. Despite this, nonperforming loans increased by $156 million quarter-over-quarter, indicating that credit conditions remain stable but are facing modest pressure compared to prior periods.
Net income for the quarter totaled $6.9 billion, down from $7.8 billion a year ago, reflecting the higher credit provisions and rising costs associated with investments in the business. Non-interest expenses came in at $16.48 billion, in line with expectations, but up 4% year-over-year, driven primarily by revenue-related expenses and continued investments. Despite the rising expenses, Bank of America delivered a strong return on average equity of 9.44%, beating the estimated 9.01%, and return on average tangible common equity (ROTCE) of 12.8%, exceeding expectations of 12.2%.
Bank of America’s balance sheet metrics were solid, with total loans at $1.08 trillion and total deposits stable at $1.93 trillion, both matching estimates. The bank's net interest yield of 1.92% was slightly below the expected 1.93%, but the overall interest income growth reflected the continued resilience of its core lending operations. Basel III common equity Tier 1 ratio came in at 13.5%, in line with expectations, indicating a strong capital position to support growth and manage credit risks.
CEO Brian Moynihan highlighted the strength of the bank’s lending and deposit businesses, noting that it was the fifth consecutive quarter of sequential average deposit growth. He also emphasized the bank's continued focus on net interest income growth, supported by higher loan balances and strong trading and investment banking performances. Moynihan expressed confidence in the bank’s ability to navigate the current macroeconomic environment while delivering solid results.
The bank’s credit performance showed some areas of stability and concern. Consumer net charge-offs declined slightly due to lower credit card losses, with a credit card loss rate of 3.70%, down from 3.88% in the previous quarter. However, commercial net charge-offs saw a slight increase, which will be an area to monitor as economic uncertainty persists. The provision for credit losses rose compared to the prior quarter, indicating cautious optimism about credit quality, despite modest pressures from rising nonperforming loans.
Overall, Bank of America’s Q3 earnings report reflects a well-balanced performance across its business segments, with strong trading and investment banking results helping to offset challenges from rising credit costs and modest loan growth. The positive market reaction, with shares up 1.2% in premarket trading, signals investor confidence in the bank’s ability to continue delivering solid results amid a challenging macroeconomic backdrop.