Bank of America (NYSE:BAC) reported a third-quarter profit increase, benefitting from higher interest payments by customers, while its investment banking and trading divisions performed better than anticipated.
The second-largest U.S. bank disclosed a net income of $7.27 billion, equivalent to 91 cents per share, for the three months ending on Sept. 30. This marked an improvement compared to the $6.58 billion, or 81 cents per share, reported in the same period a year earlier.
Bank of America’s investment banking and trading units exceeded Wall Street’s expectations by reporting higher revenue, defying a broader industry decline.
Simultaneously, lenders saw a boost in interest income, as they were able to charge customers higher loan rates following the Federal Reserve’s interest rate hikes aimed at combatting inflation. Bank of America’s net interest income (NII) increased by 4% in the third quarter, reaching $14.4 billion.
Other major financial institutions like JPMorgan Chase, Citigroup, and Wells Fargo also reported substantial NII growth and raised their forecasts for this crucial metric.
Interest income across the financial sector has also been bolstered by American consumers maintaining healthy household finances and continuing to use their credit cards for spending, despite the looming prospect of an economic slowdown.