Bank of America shares fall after company reports lower fourth-quarter profit, hit by regulatory charge

Bank of America shares fell 1.1% Friday after the firm reported declining fourth-quarter earnings amid hefty one-time charges.

Here’s what the company reported compared to Wall Street expectations, according to LSEG, formerly known as Refinitiv:

  • Earnings per share: 70 cents, adjusted vs. 68 cents expected.
  • Revenue: $22.1 billion vs. $23.74 billion expected.

Bank of America said its net income fell to $3.1 billion, or 35 cents per share, in the fourth quarter, down more than 50% from $7.1 billion, or 85 cents per share, a year ago.

The bank, based in Charlotte, North Carolina, said it was hit by a pretax charge of $1.6 billion in the quarter related to the transition away from the London Interbank Offered Rate. The results also included a special $2.1 billion fee charged by the Federal Deposit Insurance Corporation. The fee is tied to the failures of Silicon Valley Bank and Signature Bank. Excluding items, the company said it earned 70 cents per share, which outpaced analysts’ expectations.

However, revenue of $22.1 billion fell short of Wall Street’s estimates for the first time in two years and was down 10% from the year-ago period.

“We reported solid fourth quarter and full-year results as all our businesses achieved strong organic growth, with record client activity and digital engagement,” CEO Brian Moynihan said in a statement. “Our expense discipline allowed us to continue investing in growth initiatives. Strong capital and liquidity levels position us well to continue to deliver responsible growth in 2024.”

The nation’s second-largest bank posted a $1.1 billion provision for credit losses, up $12 million from the same quarter last year.

Bank of America said its net interest income decreased 5% to $13.9 billion due to higher deposit costs and lower deposit balances, which more than offset higher asset yields.

The bank was supposed to be one of the biggest beneficiaries of higher interest rates last year, but it has underperformed its peers because the lender had piled into low-yielding, long-dated securities during the Covid-19 pandemic. Those securities lost value as interest rates climbed.

Revenue from consumer banking dipped 4% to $10.3 billion, while sales and trading revenue went up 3% to $3.6 billion.

Bank of America stock is down 2.6% this year after a mere 1.7% gain in 2023. The S&P 500 financial sector gained 10% last year.

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Source: https://www.cnbc.com/2024/01/12/bank-of-america-bac-earnings-4q-2023.html

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