According To Bank of America's Latest Earnings, US Customers Remain Strong And Active
Any indications of an impending recession in the United States are difficult to see in Bank of America’s quarterly earnings report, which was released on Monday.
The country’s second-largest bank made $7.1 billion in earnings in the third quarter, an 8% decrease from the previous year but more than analysts expected. Consumer deposits increased by 1%, but credit card spending increased by 13%.
Alastair Borthwick, the bank’s chief financial officer, stated that Bank of America’s retail users appeared to be in a good position.
“Overall, people are resilient and continue to spend at an increased rate,” Borthwick said on a conference call with reporters on Monday. “They’re paying down their loan balances at high interest rates while still having the opportunity to borrow.”
According to Borthwick, the 9% annual growth rate in consumer expenditure, down from 12% earlier in the year, was the sole indication that a change might be in the works.
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Borthwick noted that even while the bank increased its reserve of money by $378 million to cover possible loan losses, it was still a healthy sign because it indicated that the bank was expanding its lending rather than a decline in the quality of the loans that were already on its books.
On Wall Street, Bank of America’s sales and trading revenue increased by 13%. Bond, commodity, and other financial interest trading revenue increased by 27% over the same period in 2017, while stock trading revenue decreased by 4%.
Investment banking fees accounted for 46% of total revenue. However, the bank increased its revenue from providing worldwide transaction services to large corporations by 44%, and its loan and lease balances among large corporate customers increased by 18%.
Borthwick stated that the “negative impact of foreign currency valuations” has harmed some of the bank’s global customers.
Bank of America’s stock climbed more than 2% in premarket trading. Its profits matched those of Citigroup, JPMorgan, and Wells Fargo, showing the lenders planning for a possible slowdown but reporting strong results as customers continued to spend.
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