Bank of America shares drop after third-quarter revenue miss and regulatory penalty
Summary
Bank of America experienced a decline in its third-quarter profit following a significant penalty from the U.S. Treasury Department. The federal agency imposed a financial fine of $1.2 billion against the banking institution.
Bank of America shares fell Wednesday after the company posted weaker-than-expected trading revenue and the impact of a $1.2 billion Treasury fine.
Our Take
The headline looks ugly, but most of the damage is a one-time hit. Excluding the $1.2 billion AML settlement, Bank of America earned $1.08 per share, just shy of the roughly $1.10 Wall Street expected. Net income would have been about $8.1 billion without the fine.
The core franchise held up: net interest income came in around $16.6 billion, Wealth Management revenue grew 13%, and the bank still returned $8.3 billion to shareholders, including $6 billion in buybacks. The soft spot is Global Markets, where revenue fell 6% while peers like Morgan Stanley posted big trading beats.
The fine itself is a one-off, but the bigger question is how much extra compliance spending the consent orders will force, which could weigh on margins for a few quarters. For traders, watch whether BAC holds its post-earnings low. One-time-charge selloffs can attract dip buyers, but the small miss on adjusted EPS limits the upside for now.
Levels for Wednesday:
- BAC closed Tuesday at $53.96 and was indicated near $51 in pre-market trading, a drop of roughly 6%.
- Resistance: Tuesday's close at $53.96. Reclaiming it would mean the market is treating the fine as a one-off.
- Support: the $50 round number. Losing it opens room toward the 52-week low near $45.64.
The tell: if BAC fades while JPMorgan and other big banks hold up, the market is pricing in more than just the fine.
Opinion of Tech & Money Press. Not financial advice.
Source: Read the full story at US Top News and Analysis