Bank of America shares drop 8% after third-quarter revenue miss and regulatory penalty — SkimNews
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- Bank of America reported Q3 revenue of $30.12 billion against $30.69 billion expected by LSEG and EPS of 91 cents versus $1.10 expected, driving shares down as much as 8% in morning trading.
- A $1.2 billion U.S. regulatory penalty for failing to report billions of dollars in suspicious transactions sapped earnings by 17 cents per share, dragging Q3 profit down 17% to $6.93 billion.
- Fixed income trading revenue fell 17% to $2.55 billion — roughly $450 million below the StreetAccount estimate — on weakness in mortgages, municipals, and credit; combined with equities, total trading fell 5% despite CEO Brian Moynihan's prior guidance of roughly flat results.
- Net interest income rose 7.9% to $16.6 billion, edging out the $16.53 billion StreetAccount estimate, while investment banking revenue dropped 11% to $1.8 billion in line with expectations.
- Wells Fargo analyst Mike Mayo called Bank of America's capital markets results "easily worst in class" for the quarter; CFO Alastair Borthwick blamed the bond-trading shortfall on an 85-basis-point rate rise during the period.
- Brian Moynihan, who has led the bank since 2010, told analysts the firm is "on the right course to remediate everything" but declined to commit to a timeline for resolving the regulatory matter, while JPMorgan analyst Vivek Juneja pressed him on whether compliance costs had truly been contained.
Why it matters: Bank of America's $1.2 billion anti-money-laundering penalty lands alongside a trading miss bigger than the fine — fixed income revenue fell 17% to $2.55 billion, about $450 million below estimates. CEO Brian Moynihan now faces investor pressure on both compliance culture and the pace of future share repurchases at the second-biggest U.S. bank by assets, with no regulatory resolution timeline in sight.
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