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Bank of America triples rates on money market accounts in Q3

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Bank of America triples rates on money market accounts in Q3

Deposit pricing pressure appears to have arrived. A day after JPMorgan Chase & Co. reported that its high-wealth clients drove an increase in the bank's offering on money-market accounts, Bank of America Corp. reported a similar story.

Bank of America on Oct. 13 reported third-quarter results, disclosing that it tripled its offering rate on money-market accounts as its high-wealth clients sought a better yield. Still, rates remain low from an absolute perspective, with the bank paying 0.21% on negotiable order of withdrawal and money market deposit accounts, up from 0.07% in the second quarter and 0.05% in the 2016 third quarter.

The bank reported some run-off in deposits in its global wealth and investment management business, reporting average deposits of $239.6 billion in the third quarter, down from $245.3 billion in the second quarter. CEO Brian Moynihan, however, said the bank's quarter-end deposits were actually higher as the bank's increase in rates was able to put a stop to the run-off. He also said the pricing pressure appeared limited, for now.

"It's really localized in the [global wealth and investment management] business, and it's really driven by a subset of those deposits," Moynihan said, adding, "It's really narrowly in the area that has to do with really investment cash rather than transitional and transactional cash."

Indeed, the bank's yield on savings accounts remained flat at 0.01%. Still, the movement on money-market accounts was sufficient to push up the bank's yield on total interest-bearing deposits to 0.30% in the third quarter from 0.17% in the second quarter.