Bank of America Reports $1.2 Billion Fine Impacting Earnings

Bank of America reported a profit of $6.9 billion, or 91 cents a share, for the recent quarter, down from $8.3 billion, or $1.04 a share, in the same period last year. The decline in earnings was attributed to a $1.2 billion fine imposed for failing to report over $5 billion in suspicious activity, including connections to Chinese money laundering networks and narcotics trafficking, as stated by the Treasury Department. The fine reduced earnings by 17 cents per share. Adjusted earnings per share, excluding the fine, were reported at $1.08, which fell short of analysts' expectations of $1.10. Revenue increased to $30 billion from $29 billion, but also did not meet the anticipated $30.58 billion. Treasury Secretary Scott Bessent emphasized the broader implications of the bank's failure to meet anti-money laundering obligations, stating that it exposes the U.S. financial system to significant risks. Bank of America acknowledged its commitment to addressing financial crime, highlighting investments in technology and personnel. The penalties include a $750 million fine from the Office of the Comptroller of the Currency, marking the largest fine in the OCC's history. Additionally, Bank of America agreed to an $11.6 million settlement with the Office of Foreign Assets Control for violations related to sanctions. The bank is required to work with a third party to review suspicious transactions and undergo an independent compliance review. In contrast, Morgan Stanley reported a third-quarter revenue of $20.3 billion, surpassing estimates, with net income rising to $4.97 billion, or $3.03 a share. Following the earnings report, shares of Bank of America fell by 5.9%, while Morgan Stanley's shares declined by 3.5%.