Bank of America beat analysts’ earnings estimates as fees climbed at the company’s dealmaking unit, boosted by a record-breaking period for mergers and acquisitions.
Investment banking advisory fees rose 65% to $654 million in the third quarter as firms leaned on Bank of America to handle their debt and equity financing, and a combination of cheap financing for buyers and attractive valuations for sellers spurred a wave of takeovers.
“The economy continued to improve and our businesses regained the organic customer growth momentum we saw before the pandemic,” Chief Executive Brian Moynihan said in a statement Thursday. “Deposit growth was strong and loan balances increased for the second consecutive quarter, leading to an improvement in net interest income even as interest rates remained low.”
Government aid programs that kept consumers and businesses afloat during the pandemic had cut into loan growth at financial firms. That trend, combined with historically low interest rates meant to bolster the economy, has weighed on the profitability of banks’ core lending businesses.
But there are signs of a turnaround. Loans and leases rose 1% from the previous quarter to $927.7 billion. That’s more than analysts’ estimates of $923.9 billion.
Net interest income, or revenue from customer loan payments minus what the company pays depositors, rose 10% to $11.1 billion. In April, the bank forecast that NII would be about $1 billion higher by the end of the year than the $10.3 billion it posted in the first quarter. By the second quarter, NII had slipped slightly to $10.2 billion.
Bank of America shares, which gained 42% this year through Wednesday, advanced 2.2% to $44.10 at 7:07 a.m. in early New York trading.
