Brian Moynihan, CEO, Bank of America
Scott Mill | cnbc
Bank of America Reported Q4 Results Higher interest rates on Friday helped the Wall Street giant make up for a sharp downturn in investment banking.
Here are the key metrics compared to what Wall Street was expecting:
- Earnings: 85 cents per share versus 77 cents per share, according to Refinitiv
- Revenue: $24.66 billion versus $24.33 billion according to Refinitiv
Shares of Bank of America declined about 2% in early trading.
Expectations were running high that Bank of America would report a gain in interest income in the fourth quarter due to higher rates and loan growth. According to StreetAccount, the bank reported net interest income of $14.7 billion, up 29% year over year but slightly below Wall Street’s expectations of $14.8 billion.
That gain helped offset a decline in investment banking fees, which fell more than 50% to $1.1 billion. According to StreetAccount, the result was largely in line with expectations.
Bank of America led by CEO Brian Moynihan, was considered one of the main beneficiaries of the Federal Reserve’s rate-boosting campaign. But the bank’s shares rallied last year amid fears of a recession.
“The themes in the quarter were consistent throughout the year as organic growth and rates helped deliver value to our deposit franchises. Combined with expense management, it helped drive operating leverage for the sixth consecutive quarter,” Moynihan said in a statement. “
Investors will be eager to see how Moynihan describes the situation for the bank’s retail and business customers. The bank implemented a $1.1 billion provision for loan losses, up from $1.6 billion in the same quarter in 2021, but said net charge-offs are below pre-pandemic levels.
Notably, this was less than the $2.3 billion provision for credit losses from rival JPMorgan Chase, in which it is warned that “Slight Recession” Is Now Its Central Case For US Economic Outlook, In the earnings release, Moynihan described the economic environment as “slowing down rapidly.”
On the consumer banking front, Bank of America reported that balances were roughly flat, while credit card and debit spending increased 5% year over year. The average outstanding amount on credit cards increased by 14%.
Average loans and leases grew 10% year over year for the bank as a whole, while the same metric for Consumer Banking grew 6%.
The global wealth and investment management business saw a modest increase in total revenue despite a decline in average deposits. Net income for the segment was down 2% year over year.
Prior to the report, Bank of America stock was up 4% in the first few days of 2023.
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