Bank of America Wednesday sent down a clear profit after being hit with a $ 1.2 billion penalty by US regulators, while revenue was also disappointed after trading operations generated about $ 750 million less than expected.
Shares of the bank fell more than 5% in premarket trading.
Here is the company’s report:
- Earnings per share: 91 cents, may not compare to $1.10 expected by LSEG
- result: $30.12 billion vs $30.69 billion expected by LSEG
The bank’s third-quarter profit fell 17% to $6.93 billion, or 91 cents per share. Excluding the penalty, which reduced earnings by 17 cents, EPS would have been $1.08 per share.
The company’s revenue rose 3.2% to $30.12 billion in the quarter, on an FTE basis, but fell short of expectations by about $570 million, largely due to the absence of Wall Street trading operations.
Fixed income trading fell 17% to $2.55 billion due to weakness in mortgage, municipal and credit activity. That’s about $450 million below StreetAccount’s estimate.
Equity trading revenue rose 10% to $2.51 billion, but was also below analysts’ expectations, by nearly $300 million.
The trading disappointment came after CEO Brian Moynihan told analysts last month that trading revenue would be roughly flat; instead combined bond and stock trading results fell 5%.
Investment banking revenue fell 11% to $1.8 billion, roughly in line with expectations and Moynihan’s September guidance.
Net interest income, the main profit driver closely watched by Bank of America investors, rose 7.9% to $16.6 billion, slightly missing StreetAccount’s estimate of $16.53 billion.
The Treasury episode, in which US regulators said the company failed to report billions of dollars in suspicious transactions, is sure to raise questions about whether Moynihan has a controlling interest in the second-biggest US bank by assets.
Moynihan took the helm in 2010 and spent the early years of his tenure fixing mortgage-related irregularities after the 2008 financial crisis. Now, questions are being raised about whether there are risk management problems waiting to be discovered.
The Treasury fine, announced on Tuesday, added 11th hour intrigue to a normally routine bank earnings week. On Tuesday, JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo posted mixed results, with JPMorgan missing EPS and revenue estimates for the first time in a year.
Correction: Bank of America reported third-quarter revenue on an FTE basis of $30.12 billion compared to LSEG’s estimate of $30.69 billion. An earlier version misstated the comparison.