Bank of America beats profit estimates on dealmaking strength

[WASHINGTON] Bank of America beat Wall Street estimates for profit, benefiting from bumper third-quarter investment banking, and upgraded its outlook for net interest income (NII), sending its shares up about 4 per cent in trading before the bell.

The second-largest US bank sees fourth-quarter NII between US$15.6 billion and US$15.7 billion, up about 8 per cent from a year earlier.

The Federal Reserve’s 25-basis-point cut in September, as well as other economic factors, are expected to stoke demand from borrowers.

“Unemployment still remains at a pretty low level, wage growth is pretty good overall, home prices remain in a good place, and obviously the stock market’s in a good place,” chief financial officer Alastair Borthwick said on a call with journalists.

He also said that these conditions probably accounted for the “performance in consumer and in commercial.”

The bank and its biggest rivals also gained from renewed confidence among corporations to carry out large mergers and acquisitions.

Investment banking fees at BofA rose 43 per cent to US$2 billion from a year earlier, compared with executives’ earlier forecast for a 10 per cent to 15 per cent increase.

Net interest income – or the difference between what the bank earns on loans and pays out on deposits – rose 9 per cent to US$15.2 billion in the quarter from a year earlier.

BofA had previously said it expects record net interest income in 2025.

SEE ALSO

“Strong loan and deposit growth, coupled with effective balance sheet positioning, resulted in record net interest income,” CEO Brian Moynihan said in a statement.

BofA’s stock, up 14 per cent so far in 2025, has, however, underperformed all of its peers as well as the KBW Bank Index.

The bank also lowered its provisions for credit losses in the third quarter to US$1.3 billion from US$1.5 billion a year earlier and US$1.6 billion in the previous quarter, echoing a similar move by Wells Fargo on Tuesday.

Globally, megadeals reached US$1.26 trillion during the reported quarter, a 40 per cent jump from the same period last year, marking the second-highest third-quarter total on record, according to Dealogic data.

Overall global dealmaking topped US$3 trillion in the first nine months of 2025, reaching the highest level since the pandemic peak in 2021, according to Mergermarket data.

Peers JPMorgan Chase and Citigroup also beat estimates for third-quarter profit, helped by strength in their investment banking businesses.

“With deal activity picking up and monetary policies coming into focus, banks are keeping on an even keel as they navigate through economic volatility,” KPMG US Banking Sector Leader Peter Torrente said, adding that continuous assessment of rate trajectory and consumer financial health” remains crucial as banks head into the final months of the year.”

Bank of America on Wednesday reported a net income of US$8.5 billion, or US$1.06 per share, in the three months ended Sep 30. That compares with US$6.9 billion, or 81 US cents per share, a year earlier.

The Street was expecting a profit of 95 US cents per share, according to estimates compiled by LSEG.

Bank of America is among the group of lenders to bankrupt auto parts maker First Brands, but the loans are backed by strong collateral, Borthwick said on Wednesday.

“We’re in the syndicated loan for the First Brands deal,” Borthwick told reporters in a call.

“That is an asset-backed loan. So when we think about prudent risk management, we’re thinking about the borrower, we’re thinking about the collateral, and here, we’re secured.”

The bankruptcies of First Brands and car dealership Tricolor have triggered a reassessment of risk controls on Wall Street, with JPMorgan saying it reviewed its exposure after finding itself affected. Still, banks broadly maintained that the credit quality of US borrowers remains strong.

Bank of America does not have exposure to Tricolor. REUTERS