Bank of America Corp. joined other big U.S. banks in reporting a 9% drop in third-quarter profit on Monday as it set aside funds to cover soured loans from a potential deterioration in the U.S. economy.
The second-largest U.S. bank added $378 million to its loan-loss reserves as it braces for a weakening economy. That compares with a release of $1.1 billion a year earlier.
The U.S. Federal Reserve’s aggressive monetary policy actions to tamp down inflation have sparked concerns that the economy could slip into a recession as interest rates rise.
“Our U.S. consumer clients remained resilient with strong, although slower growing, spending levels and still maintained elevated deposit amounts,” said chief executive officer Brian Moynihan.
JPMORGAN PROFIT DOWN 17% AS DEALMAKING SLUMPS
The bank’s consumer business reported a 12% jump in revenue, helped by higher balances and a rise in interest rates.
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Investment banking fees fell 46% as global dealmaking shrank for the third consecutive quarter after a blockbuster 2021.
The bank, however, managed to retain its top spot in global leveraged finance this year even as deal volumes in the sector shrank by a quarter to $1.4 trillion, according to data from Dealogic.
Excluding items, it earned 81 cents per share, according to Refinitiv calculations, beating the average analyst estimate of 77 cents per share, driven by a 24% gain in net interest income.
Net profit applicable to common shareholders was $6.6 billion, or 81 cents a share, for the quarter ended Sept. 30, compared with $7.3 billion, or 85 cents a share, a year earlier.
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