Bac Stocks: BofA Tops Loan-Revenue Estimates

Bank of America Corp. recorded its highest quarterly net interest income in at least a decade as the company benefited from Fed rate hikes and debt traders topped predictions.

NII, the bank's main source of revenue, increased 24% to $13.8 billion in the third quarter due to higher rates and loan growth. Analysts had predicted a 23% increase in NII.

“We continued to see solid organic client growth across our businesses, with higher client engagement helping to drive revenue up by 8%,” CEO Brian Moynihan said Monday.

Bank of America's stock surged 4.6% to $33.16 at 9:37 a.m. in New York. They have dropped 26% this year, compared to a 23% drop in the KBW Bank Index.

The bank's non-interest expenses grew 6% to $15.3 billion. Investors are focused on costs this year after management claimed they'll fall in coming quarters.

Bank of America forecasts full-year spending of $61 billion, up from $60 billion earlier this year, CFO Alastair Borthwick said.

The bank's traders outperformed expectations, with bond trading revenue increasing 27% to $2.55 billion and equities trading revenue decreasing 4% to $1.54 billion.

Investment-banking revenue fell 46%, less than the 47% decrease expected by analysts, as the same market turbulence that drove trading up also dampened dealmaking.

The company's loan balances increased 12% year on year to $1.03 trillion at the end of the third quarter, slightly less than analysts' projections of around $1.04 trillion.

Bank of America boosted its credit loss provisions to $898 million. This comes on the heels of $523 million in the preceding three months.