BofA profit falls due to weaker interest income

Bank of America (BAC) on Tuesday reported a decline in third-quarter profit as its revenue from customer interest payments fell.

The bank's shares fell 0.3% in premarket trading.

Faced with intense competition for deposits, banks are paying higher interest rates to prevent customers from switching to lucrative alternatives such as money market funds.

BofA's net interest income (NII) – the difference between a bank's income from loans and payouts from deposits – fell 3% to $14 billion in the third quarter.

The gains contrast with rivals JPMorgan Chase and Wells Fargo, whose results beat expectations last week.

BofA's provisions for loan losses rose to $1.5 billion in the quarter from $1.2 billion a year earlier.

Higher interest rates put borrowers under pressure and increase the risk of default, prompting banks to set aside larger reserves to cover such loan defaults.

Meanwhile, Wall Street has been buoyed by a rebound in activity in recent months as rising confidence prompted customers to issue debt and stocks.

A resurgence in mergers and acquisitions has also pushed up advisory fees, while the Federal Reserve's rate cut last month could spur even more dealmaking.

BofA's investment banking fees rose 18% from a year ago to $1.4 billion.

Last month, Moynihan said he expected investment banking revenue to remain broadly stable.

Net income at the second-largest U.S. bank fell to $6.9 billion, or 81 cents per share, it said Tuesday. That was down from $7.8 billion, or 90 cents per share, a year earlier.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Anil D'Silva)