Investment banking and trading businesses strong, Bank of America Q3 earnings beat expectations, net interest income down 2.9% year-on-year | Financial report insights

Similar to other Wall Street giants, Bank of America's Q3 investment banking and trading business performed strongly, driving profits and revenues above expectations, with net interest income slightly higher than expected but showing a slight decline.

Before the U.S. stock market opened on Tuesday, Bank of America released its third-quarter results, specifically:

Total revenue of $25.49 billion, slightly exceeding the expected $25.3 billion;

Earnings per share of $0.81, surpassing the analysts' consensus of $0.77;

Net interest income decreased by 2.9% year-on-year to $14.1 billion, but still slightly higher than the consensus of $14.06 billion.

It is worth mentioning that Bank of America's net interest income in the third quarter was higher than in the second quarter, indicating an improvement in this key indicator's trend. The bank stated in July that net interest income would rebound in the second half of this year.

Bank of America analyst Mike Mayo stated in a report on Tuesday that Bank of America appears to have reached a turning point in net interest income growth, although the extent of the turnaround depends on interest rates.

In terms of revenue, due to the growth in trading revenue, asset management, and investment banking fees offsetting the decline in net interest income, revenue from equities and fixed income, currencies, and commodities trading in the third quarter increased by 12% to $4.93 billion.

Looking at the business segments, the investment banking business performed better than expected, indicating that the long-awaited rebound in trading business is gaining traction.

Sales and trading revenue increased by 12% to $4.9 billion, achieving year-on-year growth for the 10th consecutive quarter, with equity business growing by 18% and fixed income, currency, and commodities rising by 8%.

As trading activities pick up and confidence in rate cuts strengthens, stimulating clients to issue bonds and stocks, investment banking revenue increased by 18% to $1.4 billion, surpassing analysts' expectations.

After the financial report was released, Bank of America's stock price rose by 3% in pre-market trading, accumulating a nearly 24% increase year-to-date as of Monday.