Bank of America Shares Plunge After $1.2 Billion Treasury Fine
Bank of America shares fell over 7% following a $1.2 billion Treasury penalty for money-laundering violations and a third-quarter profit decline.
Shares of Bank of America fell 7.5% on Wednesday after the company reported a 17% decline in third-quarter profit to 91 cents per share. The results were heavily impacted by a $1.21 billion non-tax-deductible penalty imposed by the U.S. Treasury Department for willfully failing to report over $5 billion in suspicious transactions and prioritizing revenue over compliance.
Without the fine, profit would have been $1.08 per share, which still missed the analyst consensus of $1.10. The bank saw an 8% year-over-year increase in net interest income to $16.4 billion, but underperformed peers in capital markets. FICC trading revenue dropped 17% to $2.55 billion, and investment banking fees fell 11%. Chief Financial Officer Alastair Borthwick noted that asset quality continued to improve and liquidity remained strong.
Broader market activity was volatile as U.S. stock markets declined following a Labor Department report showing inflation accelerated to 3.7%, exceeding expectations. Rising fuel prices linked to conflict with Iran pushed 10-year Treasury yields to 5.26%, increasing expectations for a Federal Reserve interest rate hike. Other corporate moves included a 1.8% rise for BlackRock after an earnings beat and a 2% gain for GameStop after CEO Ryan Cohen purchased 844,000 shares.
