BofA Smashes Expectations with 43% Surge in Investment Banking Revenue; Shares Jump Pre-Market

TradingKey - Pre-market Wednesday, Bank of America (BofA) announced its third-quarter results, posting a 10% revenue increase that exceeded expectations, while investment banking income soared 43% year-on-year, surpassing market forecasts. 

BofA's CEO, Brian Moynihan, credited robust loan and deposit growth, coupled with effective balance sheet management, for delivering record net interest income. According to financial report data, net interest income, BofA's primary revenue driver, rose by 9.1% this quarter, reaching $15.2 billion.

In addition, Moynihan noted that BofA's "markets-facing businesses" also delivered strong revenue performance. Investment banking income surged 43% from last year to $2 billion, and equities trading revenue increased by 14% to $2.3 billion. 

With all business segments performing well, BofA's Q3 revenue climbed 10.8% to $28.24 billion, while profits increased 23% year-on-year to $8.5 billion, or $1.06 per share.

Bloomberg analysts suggest that a revival in corporate mergers and acquisitions is boosting trading activities for Wall Street investment banks. Bloomberg data shows that global deal volume in Q3 hit a record high, marking only the second time it has exceeded $1 trillion.

Currently, expectations for lower interest rates are rising, and the U.S. government is advocating for relaxed bank regulations, potentially reducing capital requirements for banks. With corporate borrowing costs nearing risk-free rates, these factors benefit bank stocks. 

Investment banks like JPMorgan, Goldman Sachs, and Citigroup have all reported strong Q3 performance, and bank executives anticipate sustained momentum in trading and investment banking.

As of Tuesday's close, BofA shares (BAC) have increased 14% year-to-date. Pre-market Wednesday, BofA shares climbed more than 4%.