BofA Increases Profits And Warns That Consumer Spending Is Slowing

Bank of America's profit rose 10% in the third quarter from a year earlier, boosted by gains with higher interest rates.

The second-largest U.S. bank posted a net income of $7.8 billion in the quarter ended in September, according to a statement released Tuesday. Revenue increased 3% to 25.2 billion.

BofA warned that consumer spending is slowing. Provisions to cover potential losses with unpaid loans almost doubled in the consumer banking unit $1.4 billion from $738 million a year earlier.

"We added clients and accounts across all lines of business," Chief Executive Office Brian Moynihan said in the earnings statement. "We did this in a healthy but slowing economy that saw US consumer spending still ahead of last year but continuing to slow."

In another signal of deterioration of credit, the rate of losses with credit cards rose to 2.72% from 2.6% in the second quarter.

Last week, JPMorgan and Citigroup also flagged that U.S. consumers are more cautious with their spending.

However, the monthly retail sales report of the Commerce Department, released today, pointed to a different scenario. Sales rose 0.7% in September, beating economists' expectations of a 0.3% increase.

Goldman

Goldman Sachs also reported results today, saying that profit fell 33% in the third quarter to $2.06 billion from $3.07 billion in the third quarter of 2022.

Earnings had the impact of slower activity in areas like IPOs, mergers and acquisitions.

"We continue to make significant progress executing on our strategic priorities and we're confident that the work we're doing now provides us a much stronger platform for 2024," CEO David Solomon said. "As the leader in M&A advisory and equity underwriting, a resurgence in activity will undoubtedly be a tailwind for Goldman Sachs."

Morgan Stanley, another big Wall Street bank, is scheduled to release earnings tomorrow.