Bank Of America Q3 Profit Drops On $1.2 Bln Treasury Fine; Shares Hit

(RTTNews) - Shares of Bank of America Corp. were losing around 6 percent in the pre-market activity on the NYSE after the banking major reported Wednesday lower third-quarter earnings, hurt by a $1.2 billion fine imposed by the U.S. Department of the Treasury on anti-money laundering issues.

Revenues, however, increased with higher net interest income and growth in consumer Banking as well as Global Wealth and Investment Management revenues.

Chair and CEO Brian Moynihan, stated, "The team delivered organic growth, deepening client relationships and adding new ones. While investment banking and sales and trading revenues were lower, commercial lending grew in every client segment. Our momentum, reflected in growth in client deposits, wealth flows and consumer activity, supported solid earnings, balance-sheet growth..."

In the third quarter, the company's net income applicable to shareholders came in at $6.541 billion or $0.91 per share, lower than $7.903 billion or $1.04 per share last year.

The latest results included mainly a $1.2 billion regulatory settlement charge in noninterest expense, which reduced earnings per share by $0.17.

The U.S. Department of the Treasury imposed a fine of over $1.21 billion on the bank for the violations of anti-money laundering and sanctions laws.

Adjusted earnings were $8.1 billion or $1.08 per share for the period.

The company's revenue for the period rose 3.2 percent to $29.958 billion from $29.040 billion last year.

Revenue growth reflected higher net interest income and asset management fees, as well as lower sales and trading revenue and investment banking fees.

Net interest income grew 8 percent from last year to $16.45 billion driven primarily by higher loan and deposit balances, higher NII related to Global Markets activity and fixed-rate asset repricing.

Noninterest income, meanwhile, fell 2 percent from last year to $13.51 billion.

Provision for credit losses of $1.3 billion was relatively flat compared to the prior year, while Consumer Banking provision for credit losses of $1.0 billion grew 4 percent.

In the quarter, consumer Banking revenue grew 4 percent from last year to $11.57 billion.

Global Wealth and Investment Management revenue of $7.12 billion climbed 13 percent year-over-year, driven by higher asset management fees, reflecting higher market valuations, strong assets under management (AUM) flows and higher NII.

Global Banking revenues of $6.21 billion were relatively flat as higher NII and treasury service charges were offset by lower investment banking fees.

Meanwhile, Global Markets Revenue of $5.87 billion decreased 6 percent, hurt by lower sales and trading revenue and investment banking fees.

Average deposits of $2.02 trillion increased 2 percent, and average loans and leases of $1.23 trillion increased 6 percent.

In pre-market activity on the NYSE, BAC shares were trading at $50.62, down 6.16 percent.

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