(AOF) – Bank of America reported higher-than-expected profits, galvanized by significant write-backs of bad debt provisions, sharp growth in interest income and the strong performance of its investment bank. On the stock market, the action of the American bank gained 2.48% to 44.21 dollars in well-oriented American markets. This publication looks like a flawless one, with costs also growing less quickly than expected.
Bank of America net income rose 58% in the third quarter to $ 7.7 billion, or 85 cents per share. The FactSet consensus was just 72 cents. The establishment benefited from net banking income up 12% to $ 22.8 billion. It came out above the market forecast: $ 21.68 billion.
It was supported by the 10% increase in net interest income to $ 11.1 billion, thanks in particular to the increase in deposits: these increased by 16% to exceed $ 1 trillion for the first time. in retail banking.
The sharp rise in profits also reflects the write-backs of provisions. Last year, US banks had to build up very heavy provisions to deal with the risk of non-repayment of loans. The pessimistic scenario taken into account did not materialize and they can now take back part of their provisions.
BoA’s provision reversals amounted to $ 1.1 billion between July and September, allowing the cost of risk to show a favorable balance of $ 624 million.
Retail banking stood out thanks to the fall in the cost of risk and costs, but also to the increase in revenues: + 10% $ 8.8 billion. Net profit rose from $ 2.05 billion to $ 3.05 billion in one year.
The Global Banking division also shone, with a net profit of $ 2.5 billion, compared with $ 926 million in the third quarter of 2020. Within it, the investment bank saw its revenues jump 23% to $ 2.2 billion. As with its competitors, this good performance reflects the many merger and acquisition transactions carried out. Consulting revenues hit an all-time high: + 65% to $ 654 million.
On an adjusted basis, net income from market activities reached $ 941 million from $ 946 million in the third quarter. On the same basis, revenues from market activities were up 3% to $ 4.5 billion, of which $ 2 billion (-4.8%) in bond and commodity brokerage and $ 1.6 billion (+ 32.5%) in equity brokerage. Bank of America outperformed JPMorgan in both areas.
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Many challenges for European banks
The European retail banking model is particularly challenged by the digital boom. Some are withdrawing from this activity, as is the case with HSBC. In addition, there is an increase in risks. Thus, according to the ECB, the strong activity of the big banks in the market for leveraged transactions and the markets for equity-linked derivatives exposes them to excessive risk-taking.
As for French banks, since the health crisis, they have been increasingly exposed to cyber risk following the need to switch financial activities massively and rapidly towards teleworking and the provision of remote services.