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Bank of America publishes its latest quarterly results on Friday.
The time of dreams
Rising interest rates have pushed up
Bank of America
in fourth quarter revenue as the bank posted a slight increase in profits.
Bank of America (ticker: BAC) reported revenue of $24.5 billion in the quarter, beating estimates of $24.2 billion and up 11% from the 2019 quarter. last year. Earnings, meanwhile, held steady at $7.1 billion, or 85 cents a share, slightly ahead of the $7 billion earned by the bank last year. Analysts polled by FactSet had expected Bank of America to post a profit of 77 cents per share.
Among the big banks, Bank of America has benefited the most from Federal Reserve interest rate hikes in 2022. Net interest income rose 29% to $14.7 billion for the quarter as the lender received higher interest payments on the loans it issued. .
Higher interest rates have advantages and disadvantages. As banks earn more interest on their loans, possibly higher rates mean banks will have to pay higher interest to depositors.
Bank of America also modestly increased its reserves for degraded loans to $403 million from a reserve release of $851 million in the year-ago quarter. Even so, Deutsche Bank analysts say they expect Bank of America’s reserve build to be lower than its peers in a potential downturn. Last month, Barrons wrote favorably of Bank of America, noting that it has the highest quality loan portfolio in its peer group. In Friday’s statement, Bank of America said net charges rose to $689 million from $362 million in the year-ago quarter, but levels are still well below pre-pandemic numbers, which implies that customers are always healthy.
Bank of America chief executive Brian Moynihan touted the bank’s results in the face of a tough environment for lenders.
“We ended the year on a strong note, growing year-over-year earnings in the fourth quarter in an increasingly weak economic environment,” Moynihan said. “The themes for the quarter were consistent throughout the year as organic growth and rates helped drive value from our depository franchise.”
Bank of America shares have fallen nearly 30% in the past 12 months, compared to the SPDR S&P Bank ETF (KBE), which fell 21% through Wednesday’s close.
JPMorgan Chase
(JMP),
Citigroup
(This
Wells Fargo
(WFC) also report the results on Friday. Morgan Stanley (MS) and
Goldman Sachs
(GS) share their results on Tuesday.
Write to Carleton English at [email protected]