BankAmerica 3rd-Quarter Net Income Advances 20%
BankAmerica Corp. said Wednesday that its third-quarter earnings rose 20%, citing profit in its capital markets businesses.
The bank, the country’s third-largest, said net income rose to $819 million, or $1.11 a share, from $683 million, or 87 cents, a year earlier.
The results exceed analysts’ average forecast of $1.09 a share. BankAmerica shares closed down $1.50 at $76.19 on the New York Stock Exchange.
“They’re delivering,” said Tom Theurkauf, a bank analyst at Keefe, Bruyette & Woods. “They’re hitting their numbers. The story at the bank has been--and continues to be--very careful management of the revenue-expense dynamic; they keep revenues above expense growth.”
The San Francisco-based bank is reviewing its businesses to ensure that they are producing sufficient return, and it has been scaling back on some products.
“I was pleased with the increase in revenue growth resulting from strong capital market activities, a strengthening California economy and numerous marketing initiatives,” BankAmerica Chairman and Chief Executive David Coulter said in a statement.
Net interest income for the three months ended Sept. 30 rose 2% to $2.19 billion. The net interest margin, or the difference between what a bank charges for loans and has to pay for funds, narrowed to 4.06% from 4.17%. The bank’s provision for credit losses increased 11% to $260 million.
Analysts said slow growth in net income was consistent with the bank’s intention of shifting its revenue toward more fee-based businesses.
The bank said it wants to sell its housing-finance business, BankAmerica Housing Services, and is trying to end a retail-banking partnership with the Jewel Osco supermarket chain, based in Chicago.
“BankAmerica is rationalizing its businesses, shedding losers and subpar performers while raising the performance of the enterprise,” said George Salem, a bank analyst at Gerard Klauer Mattison & Co.
BankAmerica’s housing services unit, the second-largest manufactured housing lender in the U.S., has more than $9 billion in loans, $3 billion of which originated in 1996.
