Bank of America profit beats estimates on cost cuts, loan growth




The Bank of America is seen covered in plywood as the Hurricane Florence comes ashore in New Bern, North Carolina
The Bank of America is seen covered in plywood as the Hurricane Florence comes ashore in New Bern, North Carolina  

(Reuters) - Bank of America Corp reported a better-than-expected rise in quarterly profit on Monday as the second-largest U.S. lender benefited from cost cuts, while higher interest rates and loan growth helped offset weaker bond trading revenue.

In his near-decade long tenure as chief executive officer, Brian Moynihan has tried to streamline the lender's sprawling operations by cutting jobs, digitizing retail operations and getting rid of crisis-era mortgages, which he inherited as part of its acquisition of Countrywide Financial.

Two years ago, Moynihan pledged to cut expenses to $53 billion by the end of this year and stick to that level until 2020.

Non-interest expense fell 2.4 percent to $13.07 billion in the third quarter, in part due to a 2 percent cut in headcount across businesses.

"Responsible growth, backed by a solid U.S. economy and a healthy U.S. consumer, combined to deliver the highest quarterly pre-tax earnings in our company's history," Moynihan said in a statement.

Net income applicable to common shareholders rose 35 percent to $6.7 billion in the third quarter ended Sept. 30.

Excluding items, the bank earned 67 cents per share, beating the average analyst estimate of 62 cents per share, according to I/B/E/S data from Refinitiv.

Loans in its consumer banking business grew 6 percent to $285 billion. Total deposits rose about 5 percent to $1.35 trillion.

BofA relies heavily on higher interest rates to maximize profits as it has a large deposit pool and rate-sensitive mortgage securities.

Total interest income - the difference between what a lender earns on loans and pays on deposits - rose 6.4 percent to $11.87 billion.

Shares of the company were up 0.7 pct at $28.66 in early trading.


(Reporting by Siddharth Cavale in Bengaluru; Editing by Anil D'Silva)

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