Bank of America beats expectations for third-quarter profit

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Bank of America beats expectations for third-quarter profit

Reuters - Bank of America Corp beat estimates for the third quarter profit on Thursday boosted by the release of reserves that were set aside last year and growth in its consumer banking division.

Net income applicable to common shareholders rose for the quarter ended September 30 to $7.26 billion, or 85 cents per share, from $4.44 billion, or 51 cents per share, a year earlier.

Analysts on average expected a profit of 71 cents per share, according to the estimate IBES issued by Refinitiv.

The Bank of America, the second largest bank by assets, released $1.1 billion in reserves in the third quarter. The bank set aside tens of billions of dollars last year to cover potential loan defaults, which it has steadily been releasing with the economic outlook improving.

Because of the composition of its balance sheet, BofA is considered the most sensitive among large U.S. banks to changes in interest rates.

The Federal Reserve's move last year to keep the benchmark rate near zero as a way to counter the economic fallout of the pandemic has been a drag on lenders, which rely on the difference between interest received on loans and interest paid out on deposits for a major portion of its revenue.