Bank of America Corp. reported an increase in net interest income as the lender benefits from rate hikes, and its traders beat analysts’ estimates, reaping the benefits of dramatic market swings spurred by the higher rates, soaring inflation, recession fears and global political turmoil.
(Bloomberg) — Bank of America Corp. reported an increase in net interest income as the lender benefits from rate hikes, and its traders beat analysts’ estimates, reaping the benefits of dramatic market swings spurred by the higher rates, soaring inflation, recession fears and global political turmoil.
Net interest income, the revenue collected from loan payments minus what depositors are paid, rose 29% to $14.7 billion in the fourth quarter on higher rates and loan growth. The second-biggest US bank reported $3.72 billion in trading revenue for the three months through December, up 27% from a year earlier, more than the 13% gain analysts had forecast. The best results were in fixed income, where revenue shot up 49%.
“We ended the year on a strong note growing earnings year over year in the 4th quarter in an increasingly slowing economic environment,” Chief Executive Officer Brian Moynihan said in a statement Friday.
Higher loan revenue combined with the increase in trading revenue lifted earnings to $7.13 billion, and per-share earnings beat analysts’ expectations. The results offer another look at how Wall Street finished a year marked by a shaky economic outlook. All the major US banks posted gains in net interest income in the third quarter, with some raising their NII forecasts for 2022.
Shares of Charlotte, North Carolina-based Bank of America rose 0.2% to $34.55 at 7:17 a.m. in early New York trading. The stock was down nearly 30% in the 12 months through Thursday.
Bank of America’s non-interest expenses rose 5.5% from a year earlier to $15.5 billion. Costs have been a focal point for investors with persistent inflation putting pressure on spending and wage growth across the globe.
Investment-banking revenue fell 54% to $1.09 billion, worse than analysts expected as the same market tumult that drove trading up muted dealmaking. Fees for advising on mergers and acquisitions declined 43%.
The company’s loan balances rose to $1.05 trillion at the end of the fourth quarter, up 6.8% from a year earlier and more than analysts’ estimates of roughly $1.04 trillion. Lending has been a key focus for investors, with government-stimulus payments first undercutting borrowing by companies and consumers during the pandemic, and rising interest rates then making loans costlier.
Also in Bank of America’s fourth-quarter results:
- Net income 1.7% to $7.13 billion, or 85 cents a share. Adjusted earnings were expected to total 78 cents, the average estimate in a Bloomberg survey.
- Companywide revenue totaled $24.5 billion, beating analysts’ estimates.
- Bank of America increased provisions for credit losses to $1.09 billion in the fourth quarter. That follows $898 million in the previous three months.
- Client balances in wealth and investment management dropped 12% to $3.4 trillion.
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