Bank of America Rides Deal Boom to Blowout Quarter

Quartz, CNBC, Bloomberg, the Wall Street Journal, and Reuters contributed to this report.

Bank of America just reminded Wall Street who’s still boss in a shaky economy. The nation’s second-largest bank crushed expectations in the third quarter, powered by a 43% surge in investment banking revenue and record-breaking lending profits.

The Charlotte-based lender reported net income of $8.5 billion, up 23% from a year earlier, or $1.06 per share, easily topping analyst estimates of 95 cents. Revenue jumped nearly 11% to $28.2 billion, driven by a wave of mergers, acquisitions, and fresh capital-raising that sent investment banking fees to $2 billion — about $380 million higher than expected.

Shares climbed almost 5% in premarket trading and are now up roughly 14% for the year.

CEO Brian Moynihan called it a quarter where “every line of business reported top- and bottom-line improvements.” Translation: just about everything clicked. Net interest income — what the bank earns from lending minus what it pays depositors — hit a record $15.2 billion, up 9%, as higher rates fattened margins. Credit losses eased to $1.3 billion, below forecasts, giving results an extra boost.

The real star, though, was the dealmaking engine. Corporate America’s appetite for mergers and financing came roaring back this summer, sending fees for advising on M&A up 51%, while equity and debt issuance rose 34% and 42%. Trading desks added more fuel, with equities revenue up 14% and fixed income up 5%.

Across Wall Street, big banks are cashing in on the revival in deal activity and steady market volatility. JPMorgan, Goldman Sachs, and Citi all posted similar wins earlier this week, thanks to the same cocktail of higher rates, healthy markets, and corporate confidence.

But dig a little deeper, and Bank of America’s blockbuster results tell a familiar story: most of the momentum is coming from wealthy clients and big corporations, not ordinary consumers. Credit card spending rose 6%, but consumer loan growth was muted. In other words, the same forces driving stock markets higher — and fueling billion-dollar mergers — are padding bank profits far more than household borrowing.

For now, the mix suits Moynihan just fine. With record lending margins, a roaring investment-banking division, and restrained expenses, Bank of America’s quarter looked like a masterclass in balance-sheet management. Whether that continues as rates stabilize and deal fever cools is another question — but for now, Wall Street’s bulls are happy to let the good times roll.