Bank of America earnings' jump, topping Wall Street estimates, as consumer credit improves

Bank of America beat analysts' estimate for third-quarter profit and revenue as the firm set aside less than expected for loan losses.

The bank posted 66 cents per share in earnings, a 43 percent increase, compared to the 62 cent estimate of analysts surveyed by Refinitiv. The firm's revenue rose by a more modest 4 percent, to $22.8 billion, compared to the $22.67 billion estimate.

The bank's provision for credit losses decreased by $118 million to $716 million, well below the $964.2 million estimate. Meanwhile, the bank managed to cut expenses 2 percent to $13.1 billion, matching analysts' expectations.

Chief Executive Officer Brian Moynihan, 59, has focused on cutting costs while looking for profit opportunities that fit his "responsible growth" mantra. Increasingly, that means avoiding what management deems unnecessary risks. His bank was the first major wirehouse to ban the purchase of penny stocks at its Merrill Lynch brokerage, CNBC reported last month. The firm's investment banking head, Christian Meissner, reportedly left recently after clashing with Moynihan over the division's resources.

"Responsible growth, backed by a solid U.S. economy and a healthy U.S. consumer, combined to deliver the highest quarterly pre-tax earnings in our company's history," Moynihan said. It was the 15th straight quarter the firm was able to improve operating leverage, he said.

Despite the risk management, Bank of America's shares have fallen along with its peers in the last month. A recent surge in U.S. interest rates has investors concerned that banks will be forced to pay depositors more for holding their money, compressing profit margins. Shareholders have also been scrutinizing loan growth for signs that it is slowing, which would cap interest income, one of the main ways lenders make money.

The lender's shares have fallen 6 percent in the last month, compared to the 6.2 percent decline of the KBW Bank Index.

This story is developing. Please check back for updates.

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