Mortgage Production Drives BOA’s Q3 Profits

Bank of America managed to escape the fate that befell JPMorgan Chase, Citigroup, PNC, and Wells Fargo in Q3.

Whereas those four banks all experienced a year-over-year decline in net income for the third quarter, Bank of America’s profit jumped by 7 percent in Q3 up to $5 billion and earnings per share climbed by 8 percent up to $0.41, compared with $4.6 billion and $0.38, respectively, last year in Q3, according to Bank of America’s third quarter earnings report released on Monday.

A substantial increase in mortgage production was a large driver of the earnings growth for Bank of America in Q3. Total mortgage production, which includes first mortgage and home equity originations in consumer banking and GWIM (global wealth and investment management), spiked by 21 percent in the third quarter up to $20.4 billion. That amount represents UPB of home equity originations or principal amount of the total line of credit.

“Strong client activity and good expense discipline combined to drive positive operating leverage as we continue to optimize and strengthen our balance sheet,” said Paul M. Donofrio, Chief Financial Officer for Bank of America. “With near-record levels of capital and liquidity, as well as robust underwriting standards, Bank of America is stronger, safer and better prepared to deliver for customers and clients than probably at any time in our history. We remain focused on delivering long-term value to shareholders. This quarter, we increased tangible book value per share by 11 percent while returning nearly $2.2 billion in capital to common shareholders.”

The bank’s FICC (fixed income instruments, currencies, and commodities) rose by 39 percent in Q3 due to stronger performance globally across credit products, led by mortgages.

“We delivered strong results this quarter by staying true to our strategy of responsible growth and focusing on the quality of the relationships with our customers and clients,” said Brian Moynihan, CEO of Bank of America. “We grew revenue, reduced expenses and continued to manage risk, resulting in a 17 percent increase in pretax earnings.”

Click here to view Bank of America’s full Q3 earnings report.