By Mehnaz Yasmin and Manya Saini
Oct 17 (Reuters) – 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 loans hit by a possible downturn in the U.S. 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.
Aggressive monetary policy moves by the US Federal Reserve to rein in 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 sustained high deposit amounts,” said Chief Executive Brian Moynihan.
The bank’s consumer business posted a 12% rise in revenue, helped by rising 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.
(Reporting by Mehnaz Yasmin and Manya Saini in Bengaluru and Saeed Azhar and Lananh Nguyen in New York; edited in Spanish by Daniela Desantis)