Investing.com – Bank of America stock (NYSE: BAC ) rose 2.6% and Wells Fargo (NYSE: WFC ) 1.2% in Thursday’s premarket trading as both banks were able to return money set aside for loan losses to the bottom line.
Bank of America, the second-largest U.S. bank by assets, released $1.1 billion of reserves in the quarter as the bank grew more confident in the ability of borrowers to repay their loans and less concerned about loan defaults. That boosted its profits by 58%, to $7.7 billion. Revenue rose 12%, to $22.8 billion.
Consumer banking, wealth management and investment banking operations all grew at BofA. In consumer banking, deposits rose as more people opened accounts. Credit and debit spending rose, too, helped also by growth in digital banking.
The global wealth management business was strong as more people engaged BofA to manage their funds, boosting fee income. Loan balances were higher at the end of the quarter. Merrill Lynch Wealth Management added around 4,200 net new households while private banking added around 275 net new relationships, BofA said.
Strong capital markets, heightened demand for advisory services in investment banking and those related to fund-raising and restructuring, boosted fee income in the division. BofA’s total investment banking fees increased 23% to near-record levels of $2.2 billion, the bank said.
At Wells Fargo, net income rose 59% to $5.12 billion, and it released $1.7 billion from loss reserves. Total revenue fell 2.5% due to lower loan balances, decreasing yields on assets and lower mortgage banking revenue.
The quarter was a little challenging for the fourth largest U.S. lender, particularly in its mortgage business under the consumer and small business banking umbrella. There were fewer originations and the fee income from that fell, too.
Growth in advisory fees from corporate and investment banking made up for the hit in trading activity in fixed income, currency and equity. Fees rose 16% over last year in the bank's wealth management business.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.