Bank of America (BAC) earnings 3Q 2023

Bank of America topped estimates for third-quarter profit on Tuesday on stronger-than-expected interest income.

Here’s what the company reported:

• Earnings per share: 90 cents vs. expected 82 cent estimate from LSEG, formerly known as Refinitiv
• Revenue: $25.32 billion, vs. expected $25.14 billion

How did Bank of America’s bonds fare last quarter?

That’s one of the key questions investors have for the second-biggest U.S. bank by assets.

Bank of America was supposed to be one of the biggest beneficiaries of higher interest rates this year. Instead, the company’s stock has been the worst performer among its big-bank peers in 2023. That’s because, under CEO Brian Moynihan, the lender piled into low-yielding, long-dated securities during the pandemic. Those securities lost value as interest rates climbed.

That’s made Bank of America more sensitive to the recent surge in the 10-year Treasury yield than its peers — and more similar to some regional banks that are also nursing underwater bonds. Bank of America had more than $100 billion in paper losses on bonds at midyear.

The situation has pressured the bank’s net interest income, or NII, which is a key metric that analysts will be watching this quarter. In July, the bank’s CFO, Alistair Borthwick, affirmed previous guidance that NII would be roughly $57 billion for 2023.  

Bank of America stock has fallen 18% this year through Monday, trailing the 10% gain of rival JPMorgan Chase.

Last week, JPMorgan, Wells Fargo and Citigroup each topped expectations for third-quarter profit, helped by better-than-expected credit costs. Morgan Stanley posts results Wednesday.  

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