Bank of America Earnings Slip - Update

By Ben Eisen 

Bank of America Corp. said Wednesday that fourth-quarter profit fell 4%.

The second-largest U.S. bank by assets said it earned $6.99 billion in the quarter, down from $7.28 billion a year earlier. Per-share earnings were 74 cents, more than the 68 cents predicted by analysts polled by FactSet.

The bank had revenue of $22.35 billion, down from $22.68 billion. Analysts had expected $22.22 billion.

Bank of America's shares rose 43% in 2019, topping the broader S&P 500, as investors bet on a continued economic expansion that is boosting big consumer banks. Shares, which have risen slightly to start 2020, were down 0.2% in premarket trading Wednesday.

The Charlotte, N.C.-based lender particularly benefited from the short-lived rise in interest rates, when the Federal Reserve raised rates nine times between late 2015 and late 2018. That was because the bank was able to charge borrowers more interest without having to significantly increase payouts to depositors.

But now the Fed has reversed course and cut rates three times in recent months, forcing the bank to adjust its businesses. Bank of America paid 0.58% on U.S. interest-bearing deposits in the fourth quarter, down from 0.63% a year earlier.

Like other major banks including JPMorgan Chase & Co., lower rates boosted appetite for borrowing. Total loans and leases rose 4% from the year-earlier period to $983.43 billion.

Net interest income fell 2.9% from the year ago period, and declined slightly from the third quarter. Net interest margin was 2.35%, down from 2.41% in the third quarter, reflecting the continued low rate environment.

Noninterest income, which is less dependent on rates, rose 0.4%.

The bank's return on average tangible common equity was 15.43% in the fourth quarter, down from 16.29% a year ago

Deposits rose 4% from a year ago to $1.43 trillion, as the largest U.S. banks continue to scoop up market share.

Expenses rose about 1% to $13.24 billion.

Trading revenue rose 7% from a year earlier, led by a rebound in the fixed-income division after a dismal fourth quarter of 2018.

Write to Ben Eisen at [e-mail]

(END) Dow Jones Newswires

January 15, 2020 07:42 ET (12:42 GMT)

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