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Updated January 13th, 2024 at 13:57 IST

Bank of America Q4 profit contracts amid one-off charges

Bank of America reported a net income of $3.1 billion for the quarter ending December 31, down from $7.1 billion a year ago.

Business Desk
Bank of America
Bank of America | Image:Unsplash
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Bank of America faced a contraction in fourth-quarter profit, influenced by $3.7 billion in one-off charges and a decline in interest income, driven by increased expenses to retain customer deposits. Despite these challenges, the bank's leadership remains optimistic about the US economic outlook, highlighting consumer resilience.

Bank of America reported a net income of $3.1 billion, or 35 cents per share, for the quarter ending December 31, down from $7.1 billion, or 85 cents per share, a year ago. Excluding specific charges related to replenishing a fund for bank failures and trade indexing methods, the bank posted a profit of 70 cents, slightly surpassing LSEG estimates of 68 cents.

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CEO Brian Moynihan expressed confidence in consumers, stressing their continued participation in economic activities. However, the bank's shares declined 1.2 per cent.

Bank of America's net interest income (NII), the difference between earnings from loans and payments to depositors, fell by 5 per cent to $13.9 billion, following a prosperous year in 2023. Executives anticipate low- to mid-single-digit percentage growth in loans for 2024.

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While acknowledging NII weaknesses, the bank managed to offset declines with robust gains in trading and investment banking. Trading revenue increased by 1 per cent to $3.8 billion, primarily driven by a 12 per cent surge in equities revenue. Investment banking fees also rose by 7 per cent to $1.1 billion, reflecting increased dealmaking activities in the fourth quarter.

Bank of America incurred a pre-tax charge of $2.1 billion in the fourth quarter to replenish a Federal Deposit Insurance Corporation (FDIC) fund. Another charge of about $1.6 billion was related to the phasing out of a Bloomberg interest rate benchmark in some commercial loan contracts.

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Despite challenges, the bank reported lower unrealized losses on securities held until maturity, benefitting from a bond market rally. Net charge-offs increased to $1.2 billion in the fourth quarter, primarily from credit cards and office real estate, compared to $931 million in the third quarter.

(With Reuters inputs)

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Published January 13th, 2024 at 13:57 IST

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