Bank of America Shares Drop After $1.2 Billion Penalty and Earnings Miss
Bank of America fell short of third-quarter expectations and recorded a $1.2 billion charge related to anti-money-laundering control failures. The bank's net interest income rose 8%, but weaker fixed-income trading and higher operating costs weighed on results. Its shares dropped sharply as investors also focused on unrealized losses in its bond portfolio.
Bank of America's quarterly profit came to $0.91 a share, below the $1.10 analysts expected. Even after excluding the $1.2 billion anti-money-laundering penalty, adjusted earnings of $1.08 missed consensus. Revenue rose about 3% to $30 billion but also disappointed, ending a six-quarter run of beats.
Fixed-income trading revenue fell 17% year over year, and investment-banking fees declined. That undershot CEO Brian Moynihan's September guidance for roughly flat sales and trading. The bank also carried more than $109 billion in unrealized securities losses, while net interest income increased 8%.
The penalty and compliance failures could intensify scrutiny of large banks, potentially affecting customers through stricter transaction monitoring and slower account reviews. Shareholders and employees may feel pressure from weaker earnings and cost cuts, while stronger AML controls could help deter illicit finance. The episode may also shape how investors assess banks' bond-portfolio risks and regulatory exposure.