Bank of America advanced in New York trading as the second-largest U.S. lender said lower legal expenses and loan losses helped profit rebound.
Net income in the third quarter rose to $2.5 billion, or 20 cents a diluted share, from $340 million a year earlier, when per-share results were break-even, the Charlotte, North Carolina-based bank said today in a statement. The average estimate of 24 analysts surveyed by Bloomberg was 21 cents.
Chief Executive Officer Brian T. Moynihan, 54, has said the “lion’s share” of costs tied to disputed mortgages are behind his bank after booking more than $45 billion tied to his predecessor’s 2008 takeover of Countrywide Financial Corp. The bank will trim $8 billion in annual operating costs by the end of 2014 and $10 billion from troubled loans a year later, Moynihan has said.
“They’ve done a fairly good job of convincing the market that those cost savings are going to occur,” said Jonathan Finger, whose family-owned investment company, Finger Interests, owns 900,000 Bank of America shares. “Their results have gotten cleaner, though a lot of folks still expect some charges going forward.”
Bank of America shares rose 1.5 percent to $14.46 at 9:44 a.m. in New York.
Total expenses during the quarter slid 6.6% from a year earlier to $16.4 billion because of lower costs in the division servicing troubled loans, staff reductions and litigation costs that fell by 31% to $1.1 billion.
Capital levels improved, with the bank saying it expects to exceed new U.S. regulatory minimums -- known as the supplementary leverage ratio -- for the parent company and its two primary banking units.
Revenue rose 5.4% to $21.5 billion. Excluding certain accounting adjustments, revenue slid to $22.2 billion from $22.5 billion.
“We saw good loan growth, improved credit quality and record deposit balances,” Moynihan said in the statement.
Income at the global banking unit, overseen by co-Chief Operating Officer Thomas K. Montag, slipped 1.5% to $1.13 billion on higher provisions for credit losses.
Global markets, the bank’s trading operations, posted a 39% drop in profit to $531 million excluding adjustments tied to credit and tax rate changes. Revenue in the division fell 5% to $3.7 billion on lower results across fixed-income units.
Revenue in the firm’s fixed-income, currency and commodities sales and trading division fell 20% to $2 billion because of “lower market volumes arising from concerns around monetary policy as well as political uncertainty domestically and abroad,” the lender said. David Sobotka became sole head of the unit last month after former co-head Gerhard Seebacher retired, according to a memo from Montag.
The lender’s results compare with $2.78 billion in third- quarter fixed-income revenue at Citigroup Inc. and $3.44 billion at JPMorgan Chase & Co.
Bank of America said equities sales and trading revenue rose 36% to $970 million on increased market volumes.
Consumer and business banking, part of retail operations overseen by co-COO David Darnell, reported that profit jumped 32% to $1.8 billion as revenue, deposits, consumer credit- card spending and small-business loans increased, the bank said. The net loss from consumer real estate, which includes home lending, widened to $1 billion from $857 million as production fell.
Profit at the wealth-management division, which includes the Merrill Lynch brokerage, jumped 26% to $719 million, fueled by higher asset-management fees.
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