BofA Beats Q3 Estimates & Registers 9% Rise in Net Income

Bank of AmericaThe stocks of Bank of America (NYSE: BAC) recovered to $25 levels after registering a 12 month low of $22.74. It is to be noted that Hathaway Inc of legendary investor Warren Buffet became its largest shareholder in August 2017. The CEO of Bank of America, Brian Moynihan, received a lot of appreciation from Buffet for the way he manages the bank. The 3rd quarter financial results of this banking firm were released last Friday.

The bank has surpassed the estimates of the analysts regarding earnings and revenue. Just like other banks like JP Morgan and Citigroup, Bank of America has registered a decline of 22% in fixed income revenue. However, based on the overall improvement in all segments, it is expected that the bank to rally in the coming days. The stocks of BofA ended the trading session on Monday at $26.24.

This North America based bank has reported net revenues to the tune of $22.079 billion in Q3 2017 as compared to $21.863 billion in the same period last year. The analysts were hoping the bank to post revenues of $21.976. For the quarter ending in September 2017, the net income for the bank was $5.122 billion as compared to $4.452 billion during the same period last year. Based on share price, quarter 3 2017 earnings of $0.48 were more than $0.41 during the same quarter in 2016. The analysts at Wall Street were hoping that the bank would post Q3 earnings of $0.45 per share.

There is 10% rise in consumer banking revenue to $8.8 billion. Also, there is 6% increase in global wealth and investment management revenue to $4.6 billion. Global banking revenue registered a yearly growth of 5% to reach $5 million. For Q3 2017, net income for Bank of America was $11.20 billion as compared to $960 million in Q3 2016; a rise of 9% on a yearly basis. It is to be noted there is 2.36% rise in net interest margin from 2.23% a year ago.

Bank of America

 

For the quarter ending in September 2017, the non-interest income was $10.7 billion which was $756 million in September 2016. The main reason for the decline in non-interest income was higher asset management fees and lower trading revenue and mortgage banking income. There was a provision of $834 million for credit losses, which declined by 2% from $850 million in 2016. There is a 3% decline or $342 million in non-interest expenses from $13.1 billion in 2016 with a drop in personal as well as non-personal costs. However, the efficiency ratio for 2017 improved to 60% from 62% in 2016.

There is 6% rise in loan balances to $842 billion while deposits increased by 4% to reach $1.27 trillion. The return on average common equity was reported by BofA of 8.1 percent which is the highest in past six years. After an excellent performance in recent quarters, Bank of America registered CET1 ratio of 11.9% as compared to 11% in 2016. The results clearly show a massive profit in operations. The bank seems to be on the right after a lacklustre performance in the past one decade or so. All these abovementioned facts and figures favour a rally in Bank of America’s stock in near future.

Bank of America - Stock Price Oct 17th, 2017

Bank of America – Stock Price Oct 17th, 2017

Based on the chart above, the stocks of the bank is trading above 50 periods moving average, and the significant technical support level is showing at 25 with accumulator indicator in rising zone. Hence, a short-term bullish reversal is expected in the stocks of this banking firm.

To benefit from this probable uptrend, we recommend traders to invest in a high or above option and set the strike price around $26. Expiry period around October 26, 2017, would be ideal for this trade.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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