Bank of America Corp (BAC, Financial) released its Q3-23 earnings report on October 17, 2023, revealing a 10% increase in net income to $7.8 billion, or $0.90 per diluted share, compared to $7.1 billion, or $0.81 per diluted share, for Q3-22. The bank's revenue, net of interest expense, increased 3% to $25.2 billion, driven primarily by benefits from higher interest rates and loan growth.
Financial Performance
Bank of America Corp (BAC, Financial) reported a net interest income (NII) increase of $614 million, or 4%, to $14.4 billion, while noninterest income rose $51 million to $10.8 billion. The provision for credit losses of $1.2 billion increased $336 million, with net reserve build of $303 million versus a net reserve build of $378 million in Q3-22. Noninterest expense of $15.8 billion increased 3%, driven by increased investments in the franchise across people and technology, as well as higher FDIC expense.
Balance Sheet and Capital Returns
Bank of America Corp (BAC, Financial) reported average deposit balances of approximately $1.9 trillion, up $1 billion from Q2-23, while average loan and lease balances increased $12 billion, or 1%, to $1.0 trillion. The bank's CET1 ratio stood at 11.9%, up 29 basis points from Q2-23, and was 240 basis points above the regulatory minimum. The bank returned $2.9 billion to shareholders through common stock dividends and share repurchases.
Business Segment Highlights
The Consumer Banking segment reported net income of $2.9 billion, with revenue of $10.5 billion, up 6%. The Global Wealth and Investment Management segment reported net income of $1.0 billion, with client balances of $3.6 trillion, up 9%. The Global Banking segment reported net income of $2.6 billion, with total investment banking fees of $1.2 billion, up 2%. The Global Markets segment reported net income of $1.2 billion, with sales and trading revenue up 8% to $4.4 billion.
Comments from Management
Chair and CEO Brian Moynihan commented,
Our teammates delivered another strong quarter. We generated $7.8 billion in earnings, up 10 percent from the third quarter a year ago. We added clients and accounts across all lines of business. We did this in a healthy but slowing economy that saw US consumer spending still ahead of last year but continuing to slow. Our growth in revenue and earnings allowed us to continue our investments in our people and technology to drive an enhanced client experience."
Chief Financial Officer Alastair Borthwick added,
We grew revenue and net income from the third quarter of 2022, as we continued to execute on our Responsible Growth strategy. We remained disciplined and decreased expenses for the second consecutive quarter while continuing to invest in our franchise. Our organic earnings generation allowed us to build our capital ratio to 11.9%, leaving us well above our 9.5% October 1st minimum requirement, and we returned $2.9 billion to shareholders in common stock dividends and share repurchases."
