Bank of America posts record third-quarter numbers on higher lending and tax breaks

Bank of America narrowly beat analyst forecasts as strong consumer lending and lower tax rates bolstered its third-quarter performance.

Pre-tax income at America's second-largest lender was $9bn, ahead 18%, while net income improved 32% to $7.2bn. Revenues net of interest expense were ahead 4% at £22.8bn.

Within its core business segments, consumer banking saw the biggest increase in net income, ahead 49% at $3.1bn. Loans were ahead 6% at $285bn and deposits 4% at $688bn.

In global banking, the bank’s second biggest unit, net income was ahead 13% at $1bn.

“Responsible growth, back by a solid US economy and a healthy US consumer, combined to deliver the highest quarterly pre-tax earnings in our company’s history,” said chairman and chief executive Brian Moynihan.

“This marks the 15th consecutive quarter of positive operating leverage, driven by continued growth in deposits, client balances in wealth management, solid loan growth and disciplined expense management.”

Chief financial officer Paul Donofrio added: “Our earnings growth year-over-year was driven by operating leverage, asset quality and a lower tax rate.” The bank’s tax rate was 20% in the third quarter, compared to 29% in the same period last year.

Bank of America, which snapped up struggling giant Merrill Lynch in a $50bn deal in 2008, is the latest Wall Street bank to post solid third-quarter numbers. On Friday, JP Morgan, Citibank and Wells Fargo all reported strong income growth.

Some investors are concerned about the affect of interest rate rises on the US economy. The Federal Reserve has increased the cost of borrowing three times this year and signalled more hikes to come.

Shares in Bank of America were flat in pre-open trading.