Bank of America profit exceeded expectations due to interest rate growth

On Monday, Bank of America Corp (BofA) representatives announced that its quarterly profit decreased less than expected 9% in view of interest rate growth, which supported the bank’s interest income and compensated a decline in investment banking.

The U.S. Federal Reserve’s aggressive action taken to tighten monetary policy in order to tackle inflation has given banks an opportunity to increase their interest profit from consumer and business loans this year.

Unlike its main rivals, BofA has a greater amount of consumer deposits, which consequently makes it more sensitive to any interest rate changes. So, the bank’s net interest income in the third quarter jumped by 24%.

Bank of America Chief Executive Officer Brian Moynihan within one of the conferences told analysts that demand for the bank’s services remains sustainable. Moynihan also added that consumer spending has been kept at a high level, and in October it has even grown by 10% in comparison with the previous year level. People continue to use deposits and credit cards.

According to Refinitiv IBES, for the previous quarter that ended on September 30 BofA managed to earn 81 cents per share, thereby exceeding the average profit of 77 cents per share that analysts expected.

Chris Kotowski, an analyst at Oppenheimer, noted that in the previous quarter, the bank was able to show great results and the potential of a strong U.S. banking system.