Bank of America, Wells Fargo and Other Banks Report Strong Earnings
Four of the country’s biggest banks reported quarterly earnings that beat expectations on Thursday, continuing a strong earnings season for the financial sector.
The solid reports from the four lenders — Bank of America, Wells Fargo, Morgan Stanley and Citigroup — underscored their optimism about the economic recovery from the pandemic, even amid risks from the Delta variant of the coronavirus, rising inflation and supply-chain headaches.
Bank of America reported a profit of $7.7 billion, or 85 cents per share, for the three-month period that ended in September. The bank’s deal makers pulled in record advisory fees of $654 million, echoing their counterparts at JPMorgan Chase, who also cashed in on a hot market for mergers and acquisitions in earnings announced on Wednesday.
“If you look at the economy, it’s improving, people are spending more and businesses are going to have to start investing,” Paul Donofrio, Bank of America’s chief financial officer, said on a conference call. “We’re optimistic about the future,” he added.
At Wells Fargo, profit was $5.1 billion, or $1.17 per share, also beating analyst estimates, thanks partly to cutting expenses.
Wells Fargo’s chief executive, Charles W. Scharf, said the bank was focused on fixing its problems after it was slapped with a $250 million fine over mortgage practices and a stinging rebuke from a banking regulator last month. It was the latest in a series of penalties the bank has faced for its conduct, including a fake account scandal that spanned more than a decade.
The fine was “a reminder that the significant deficiencies that existed when I arrived must remain our top priority,” Mr. Scharf said in a statement.
Morgan Stanley’s profit rose to $3.7 billion, or $1.98 a share, with its gains fueled by investment bankers who brought in record revenue from advising companies on transactions, and stock traders, who drove equities revenue up 24 percent.
Citigroup reported a profit of $4.6 billion, or $2.15 a share. Debt underwriting was a bright spot for the bank, which also had its best quarter for mergers and acquisitions in a decade. “The recovery from the pandemic continues to drive corporate and consumer confidence,” Jane Fraser, the Citigroup chief executive, said in a statement.
Included in profits for Bank of America, Wells Fargo and Citigroup were funds released from stockpiles they had built early in the pandemic to guard against a surge in loan defaults that never materialized. Wells Fargo released $1.7 billion, Citigroup released $1.2 billion and Bank of America released $1.1 billion. Morgan Stanley instead added slightly to its provisions for credit losses.
On Wednesday, JPMorgan, the country’s biggest bank, beat analysts expectations with earnings of $11.7 billion, or $3.74 per share. Goldman Sachs, the last of the major banks to report for the quarter, will release its results on Friday.