Bank of America posted fourth-quarter profit that exceeded analysts’ projections, spurred by higher revenue in its four business segments. CEO
said the performance positions the second-largest U.S. bank to generate record net interest this year from deposits and lending.
Quarterly profit totaled 82 cents a share, topping expectations by 5 cents on an adjusted basis, according to Zacks Equity Research. Revenue of $25.3 billion also topped estimates, spurred by higher asset management and investment banking fees and revenue from sales and trading, according to the earnings released earlier Thursday.
The Charlotte-based bank is confident that deposits and loans will continue growing, CFO Alastair Borthwick told analysts on a call. Investment banking fees soared 44% in the quarter, signaling a “rebound” in the business that the company believes will continue this year.
Borthwick cited “pro-business sentiment” emerging from Donald Trump’s re-election as president and the expectation that corporate deal-making may accelerate.
Bank of America shares slipped 45 cents (0.96%) in trading today, after gaining $1.12 Wednesday in anticipation of the company’s earnings report for the quarter and year ended Dec. 31.
The year-end results represent “a solid finish to another good year at Bank of America,” Moynihan told analysts. “We’ve positioned ourselves well for growth in 2025.”
Bank of America set aside $1.5 billion for credit losses in the quarter, up from a provision of $1.1 billion a year earlier. Credit losses narrowed from the third quarter to the fourth quarter, reflecting commercial losses that were partially offset by seasonally higher credit card losses.
The company forecast that net interest income will grow sequentially in 2025 from the first quarter to the fourth quarter when it’s projected at $15.5 billion to $15.7 billion. As deposits increased last quarter, the bank’s interest expenses on those deposits declined, boosting profitability in a trend Borthwick predicted will continue this year.
Bank of America released year-end results after Citigroup Inc. and JP Morgan Chase & Co. also posted higher-than-forecast quarterly results.
“The outlook for banks is quite extraordinary,” Mac Sykes, a portfolio manager at Gabelli Funds, said in an email to MarketWatch. “We’re seeing a normalized rate environment combined with higher real rates, which, alongside a potential M&A boom, should significantly benefit the sector.”
Sykes also cited stronger prospects for capital raising around the widening adoption of artificial intelligence by companies, as well as “stable” credit conditions and “pro-growth government” in Washington.
Compared to a year earlier, fourth-quarter revenue grew across the board at Bank of America, helped by a wider usage of the bank’s digital channels and a growing number of customers and financial services relationships.
In the consumer bank, 61% of sales transacted digitally, up from 49% a year earlier. Consumer banking revenue increased 3% to $10.6B from the third quarter of 2023 on higher net interest income and card income.
An increase of assets under management and related fees at Merrill Lynch and the Private Bank spurred revenue growth of 15% to $6 billion in Global Wealth & Investment Management. In Global Banking, revenue increased 3% to $6.1 billion on higher investment banking fees.
Higher investment banking fees and sales and trading revenue lifted revenue 18% to $4.8 billion in Global Markets.