Bank of America Corp reported a profit for the third quarter, compared with a year-earlier loss, as Chief Executive Brian Moynihan’s cost-cutting efforts helped the bank mitigate the impact of weak revenue in three of its four main businesses.
BofA has been slashingbns of dollars in costs in its commercial lending, investment banking and wealth management businesses as overnight fund rates remain near zero and worries about China’s economy and uncertainty over the timing of a US rate hike prevent traders from making big bets.
The bank’s non-interest expenses fell by a third to $13.81bn, mainly due to an 83% drop in costs in its legacy assets and servicing unit, which houses many of the bad loans inherited from Countrywide Financial.
Consumer banking was BofA’s only business to report a rise in revenue as the lender restructured its branch network, grew active accounts and issued more credit cards.
“We continue to make good progress in a tough revenue environment due to low interest rates and a sluggish economic recovery,” Moynihan, who won the backing of shareholders last month to remain chairman, said on a conference call.
“The late summer’s volatility, especially in the fixed income trading markets, (remains) challenging,” Moynihan said. BofA is seen as the most sensitive to interest rate changes among the big US banks.
Deutsche Bank analyst Matt O’Connor wrote in a note this month that BofA’s 2016 earnings would be 7.1% lower than his current estimates if interest rates don’t rise.
BofA’s total revenue fell 2.4% to $20.91bn on a fully taxable equivalent basis in the quarter ended September 30, but beat the average analyst estimate of $20.77bn, according to Thomson Reuters I/B/E/S.