Bank of America has announced better than expected third quarter earning results, surprising analysts amidst a challenging global economic landscape. The bank reported an overall net income of US$4.96 billion, a sharp 7 per cent increase from a year ago. The increase in income is mainly attributed to a 14 per cent rise in sales and trading revenue as well as intensive cost-control efforts. Commenting on the results, Chief Financial Officer Paul M. Donofrio said, “Strong client activity and good expense discipline combined to drive positive operating leverage as we continue to optimise and strengthen our balance sheet. With near-record levels of capital and liquidity, as well as robust underwriting standards, Bank of America is stronger, safer and better prepared to deliver for customers and clients than probably at any time in our history”.
Despite the good results, there are suggestions that the road to come will still be fraught with difficulties for Bank of America. The second biggest US bank by assets has a large scale retail arm, and this posts challenges ahead. Ultra low interests rates are expected to continue to squeeze the bank’s profits. Wells Fargo & Co’s recent scandal has also put a spotlight on sales practice, and possible regulation will likely increase the bank’s regulatory costs. Other banks with better than expected earning results include JP Morgan Chase Inc, Citigroup Inc and Wells Fargo & Co.