Bank of America profit falls 9% in Q3 due to higher loan provisions

Bank of America Corp joined other big US banks in reporting a 9% drop in third-quarter profit on Monday as it set aside funds to cover loans hit by a possible downturn in the US economy.

America’s second-biggest bank added $378 million to its bad-loan reserves as it braces for a weakening economy. The figure compares with $1.1 billion released a year earlier.

The aggressive monetary policy measures of the Federal Reserve efforts to curb inflation have sparked fears that the economy could slip into recession as interest rates rise.

Our US consumer clients continued to hold up with strong, albeit slower growing, spending levels and maintaining high deposit amounts,” said Chief Executive Brian Moynihan.

The bank’s consumer business posted a 12% revenue increase, helped by higher balances and higher interest rates. Investment banking fees fell 46% as global trading fell for the third consecutive quarter following the success of 2021.

However, the bank managed to maintain its top spot in global leveraged finance this year, even as trading volume in the sector fell by a quarter to $1.4 trillion, according to data from Dealogic.

Excluding one-off items, the bank earned 81 cents a share, according to Refinitiv calculations, beating analysts’ average estimate of 77 cents a share, thanks to a 24% rise in net interest income.

Net income applicable to common stockholders was $6.6 billion, or 81 cents per share, in the quarter ended September 30, compared with $7.3 billion, or 85 cents per share, a year earlier.