Bank of America Corp.'s third-quarter results gave investors a glimpse of what they had always been yearning for: a path to higher profits without higher interest rates.
Especially strong trading results played a part in that.
However, their net earnings declined - JPMorgan Chase & Co's by 7.6%, Citigroup's by 10.5% and Wells Fargo's by 3.7%. Moynihan has also sought to reduce costs in an era of stubbornly low interest rates, which the Federal Reserve slashed in 2008 to help the USA recover from the financial crisis. Analyst Steven Chubak discussed his Bullish views on the $165.5 billion company, noting that it was able to beat the Street estimates by a fair margin. The latest quarter won't decide the argument, but suggests the worst might be past.
Net income attributable to shareholders rose 6.6 percent to $4.45 billion in the third quarter ended September 30, from $4.18 billion a year earlier.
The bank posted earnings of 41 cents a share on revenue of $21.64 billion. Renowned Street house Nomura Securities persists that the New York-based company can prove to be an excellent choice for the bulls, given its healthy financial position.
Strong client activity and good expense discipline combined to drive positive operating leverage as we continue to optimise and strengthen our balance sheet.
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Stubbornly low interest rates are also exacting a heavy price.
When revenues increase, expenses increase for most companies. That is keeping banks under pressure, especially Bank of America due to its large, USA deposit base and portfolio of mortgage-backed securities. The rating score is on a scale of 1-5 where 1 stands for strong buy and 5 stands for strong sell. Profit of $4.45 billion represented a 6.6 percent gain from a year ago.
Bank of America shares gained in pre-market trade as its third-quarter earnings surpassed analysts' forecasts. While revenue was relatively flat year over year, largely due to lingering effects of near-zero interest rates, BofA was able to cut expenses from $4.711 billion in the third quarter of 2015 to $4.37 billion this quarter. Over the summer, the company said it will pare another $5 billion in expenses by 2018. A look on the firm performance, its monthly performance is 3.62% and a quarterly performance of 13.08%.
The average true range of Bank of America Corporation's (BAC) is recorded at 0.33 and the relative strength index of the stock stands 57.84. In The Meantime, its wealth management arm is facing new rules on commission payments, while the retail banking industry is facing scrutiny over sales practices following a scandal at Wells Fargo.
The analyst believes that the bull camp should find the results satisfying as Bank of America has shown strong progress in nearly all key areas, despite the fact that shares have performed strongly in the past few months.
In early October, the bank announced its head of global wealth and retirement solutions, Andy Sieg, will become head of Merrill Lynch Wealth Management at the end of the year when John Thiel steps down. Merger advisory revenue and equity underwriting fees were both lower than last year's third quarter.