Bank of America beats profit estimates on dealmaking strength, upgrades NII forecast

By Pritam Biswas and Saeed Azhar (Reuters) -Bank of America beat Wall Street estimates for profit, benefiting from bumper third-quarter investment banking, and upgraded its outlook for net interest income, sending its shares up about 4% in trading before the bell. The second-largest U.S. bank sees fourth-quarter NII between $15.6 billion and $15.7 billion, up about 8% from a year earlier. The Federal Reserve's 25-basis-point cut in September, as well as other economic factors, are expected to stoke demand from borrowers. "Unemployment still remains at a pretty low level, wage growth is pretty good overall, home prices remain in a good place, and obviously the stock market's in a good place," Chief Financial Officer Alastair Borthwick said on a call with journalists. He also said that these conditions probably accounted for the "performance in consumer and in commercial." The bank and its biggest rivals also gained from renewed confidence among corporations to carry out large mergers and acquisitions. Investment banking fees at BofA rose 43% to $2 billion from a year earlier, compared with executives' earlier forecast for a 10% to 15% increase. INTEREST INCOME BOOST Net interest income — or the difference between what the bank earns on loans and pays out on deposits — rose 9% to $15.2 billion in the quarter from a year earlier. BofA had previously said it expects record net interest income in 2025. "Strong loan and deposit growth, coupled with effective balance sheet positioning, resulted in record net interest income," CEO Brian Moynihan said in a statement. BofA's stock, up 14% so far in 2025, has, however, underperformed all of its peers as well as the KBW Bank Index. The bank also lowered its provisions for credit losses in the third quarter to $1.3 billion from $1.5 billion a year earlier and $1.6 billion in the previous quarter, echoing a similar move by Wells Fargo on Tuesday. DEALMAKING REBOUNDS Globally, megadeals reached $1.26 trillion during the reported quarter, a 40% jump from the same period last year, marking the second-highest third-quarter total on record, according to Dealogic data. Overall global dealmaking topped $3 trillion in the first nine months of 2025, reaching the highest level since the pandemic peak in 2021, according to Mergermarket data. Peers JPMorgan Chase and Citigroup also beat estimates for third-quarter profit, helped by strength in their investment banking businesses. "With deal activity picking up and monetary policies coming into focus, banks are keeping on an even keel as they navigate through economic volatility," KPMG U.S. Banking Sector Leader Peter Torrente said, adding that continuous assessment of rate trajectory and consumer financial health" remains crucial as banks head into the final months of the year." Bank of America on Wednesday reported a net income of $8.5 billion, or $1.06 per share, in the three months ended September 30. That compares with $6.9 billion, or 81 cents per share, a year earlier. The Street was expecting a profit of 95 cents per share, according to estimates compiled by LSEG. FIRST BRANDS Bank of America is among the group of lenders to bankrupt auto parts maker First Brands, but the loans are backed by strong collateral, Borthwick said on Wednesday. "We're in the syndicated loan for the First Brands deal," Borthwick told reporters in a call. "That is an asset-backed loan. So when we think about prudent risk management, we're thinking about the borrower, we're thinking about the collateral, and here, we're secured." The bankruptcies of First Brands and car dealership Tricolor have triggered a reassessment of risk controls on Wall Street, with JPMorgan saying it reviewed its exposure after finding itself affected. Still, banks broadly maintained that the credit quality of U.S. borrowers remains strong. Bank of America does not have exposure to Tricolor. (Reporting by Pritam Biswas in Bengaluru and Saeed Azhar in New York, editing by Lananh Nguyen and Shinjini Ganguli)

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