Bank of America Merrill Lynch (BoAML) reported its net income for the three months to the end of September rose to $4.5bn (£2.9bn), after making a loss of $232m in the same period in 2014.
Net income decreased from $5.3bn in the previous quarter, as did diluted earnings per share, which were $0.37, down from $0.45 in the three months to the end of June but up from a loss of $0.04 per share the year before, and still ahead of analysts' expectations.
The quarterly dip in earnings across its wealth management, trading and investment banking operations was largely driven by “negative market-related adjustments” and lower interest rates, which hit JP Morgan's results yesterday.
Expenses in its global wealth and investment management operations increased from a year before to $3.4bn, thanks to higher litigation costs over the period, and hiring almost 1,000 more advisors to strengthen its business.
BoAML has been hit with the most in fines of any of the global banks, around $70bn: it paid $231m in the quarter, up from $175m in the three months to the end of June, but quite a drop from the $6bn it was fined in the third quarter in 2014.
One of the largest retail banks in America, it reported its residential mortgage business grew 13 per cent to $17bn, and total deposits with the bank were up $50bn, bringing the total to $1.16 trillion.
Net interest income decreased seven per cent from a year ago to $9.7bn, thanks to low rates and lower consumer loan balances, but non-interest income, which includes mortgage banking, equity and bond trading, was up two per cent to $11.2bn.
The bank's investment arm Merrill Lynch generated its second-highest quarter earnings since it was taken over after the recession, generating $391m in advisory fees, and increasing its brokerage assets by eight per cent to $117bn. It ranks as the third largest global investment bank.
Equities sales and trading revenue, meanwhile, was up 12 per cent due to good derivatives performance, which the bank said was a sign of favourable market conditions.
Chief executive Brian Moynihan said:
We saw solid results this quarter by continuing to execute our long-term strategy. The key drivers of our business – deposit taking and lending to both our consumer and corporate clients – moved in the right direction this quarter and our trading results on behalf of clients remained fairly stable in challenging capital markets conditions.
Chief financial officer Paul Donofrio pointed to the bank's efforts to “improve operating leverage while continuing to invest in our business.”
“We built capital and liquidity to record levels and grew total loans for the second consecutive quarter while continuing to operate within our risk framework,” he said.
The bank has continued to sell off unwanted 'legacy assets' carried over from the recession, leaving a portfolio of around $29bn of loans, compared to around $35bn the year before.