Bank of America beats as cost cutting, credit boost results

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Bank of America reported quarterly earnings and revenue that beat Wall Street's expectations on Tuesday, helped by favorable credit conditions, lower expenses and a rise in equity income.

BofA posted third-quarter earnings excluding items of 20 cents per share, compared to having made no profit in the comparable year-ago quarter. Revenue was $21.7 billion, compared to $20.43 billion a year ago.

Analysts had expected Bank of America to report a profit of 18 cents per share on $22.03 billion in revenue, according to a consensus estimate from Thomson Reuters.

"This quarter, we saw good loan growth, improved credit quality and record deposit balances. Our customers and clients continue to do more business with us," said Chief Executive Officer Brian Moynihan, in a statement. "The economy and business climate will improve even more quickly as conditions normalize, and we are well positioned to benefit from that."

The banking giant's shares jumped by more than a percent in trading on the New York Stock Exchange.

Revenue from consumer and business banking at BofA rose to $7.52 billion in the quarter, with net income up 32 percent to $1.8 billion. Average deposit balances at the bank rose to $522 billion, an increase of $43.9 billion from a year ago. Cost cutting at the bank also played a role, as BofA recently moved to lay off more than 2,000 employees in its beleaguered mortgage division.

On a conference call, CFO Bruce Thompson said the bank had shed 3.5 percent of its staff during the quarter, citing a 4 percent drop in non-litigation expenses. However, mortgage and capital markets were a drag on revenues, he added.

Meanwhile, Clients gave their brokers and bankers at Merrill Lynch Wealth Management and U.S. Trust more money to manage in the third quarter, but revenue at the main wealth businesses of Bank of America Corp fell from the second quarter on reduced trading activity and seasonal lassitude.

Revenue at Merrill Lynch fell 2.6 percent from the second quarter, but was up 6.6 percent to $3.6 billion from a year earlier. Merrill ended the quarter with just over 14,000 brokers, down 133 from the end of June, primarily due to attrition of trainees who were not meeting their targets, a spokeswoman said in an email.

She said that turnover among Merrill's most productive brokers, or the top two quintiles, was "at historically low levels.'' Revenue at U.S. Trust, the private banking unit for high-net-worth clients, rose to $730 million, its second highest quarter since the end of 2008 and up 11.3 percent from a year earlier.

CORRECTION: An earlier version of this story misstated quarterly revenue at U.S. Trust, which was originally reported by Reuters.

--CNBC's Margaret Popper and Reuters contributed to this story.