Bank of America (BAC) reported a drop in third-quarter profit on Tuesday as revenue from customer interest payments fell.
The bank’s shares fell 0.3% in premarket trading.
Banks are paying higher interest rates amid fierce competition for deposits to prevent customers from fleeing to lucrative alternatives such as money market funds.
BofA’s net interest income (NII) – the difference between what a bank earns on loans and pays out on deposits – fell 3% to $14 billion in the third quarter.
The gains contrast with those of rivals JPMorgan Chase and Wells Fargo, whose results exceeded expectations last week.
BofA’s provision for credit losses rose to $1.5 billion in the quarter from $1.2 billion a year earlier.
Higher interest rates put pressure on borrowers and increase the risk of defaults, forcing banks to set aside larger provisions to cover such credit losses.
Meanwhile, Wall Street has been buoyed by a recovery in activity in recent months as improving confidence prompted clients to issue debt and equity.
An uptick in mergers and acquisitions has also pushed up advisory costs, while the Federal Reserve’s rate cut last month could spur even more deals.
Investment banking expenses at BofA rose 18% to $1.4 billion from a year earlier.
Last month, Moynihan said he expected investment banking revenues to remain largely stable.
The second-largest U.S. bank’s net profit fell to $6.9 billion, or 81 cents per share, the bank said Tuesday. That was down from $7.8 billion, or 90 cents per share, a year earlier.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Anil D’Silva)
