Bank of America Profit Rises Sharply -- 2nd Update
January 16 2019 - 8:44AM
Dow Jones News
By Rachel Louise Ensign
Bank of America Corp. said Wednesday that fourth-quarter
earnings rose sharply, helped by rising interest rates and lower
taxes.
Quarterly profit at the Charlotte, N.C.-based bank, the second
largest in the U.S. by assets, was $7.28 billion, compared with
$2.37 billion a year ago. Per share, earnings were 70 cents.
Analysts polled by Refinitiv had expected 63 cents per share.
In the same quarter a year ago, the bank's profit was hit by a
large one-time charge related to the corporate tax overhaul passed
in late 2017. Excluding that charge, profit for the quarter was up
39%.
Fourth-quarter revenue was $22.74 billion, up from $20.44
billion a year ago. Analysts had expected $22.40 billion.
The bank's full-year 2018 profit of $28.15 billion is the
largest in Bank of America's history.
Shares rose almost 5% in premarket trading.
The results are the latest example of how big lenders are
benefiting from the Federal Reserve's rate increases. Higher rates
mean banks can charge more for loans, and it usually means they
have to pay more interest on deposits. But the Fed's slow and
steady pace has allowed big banks to charge borrowers more without
having to significantly increase payouts to depositors.
Bank of America paid 0.63% on U.S. interest-bearing deposits in
the fourth quarter, compared with 0.50% in the third quarter.
Still, bank stocks have suffered in recent months. This is the
last quarter in which earnings growth will benefit from favorable
comparisons to a period when corporate tax rates were higher, and
the Fed has signaled a more cautious approach to future rate
increases.
Loans at Bank of America grew 1.2% from a year earlier, while
deposits were up 5.5% over that period. Expenses were down
1.1%.
Profit rose in all of the bank's key businesses, from consumer
banking to markets. But investment-banking revenue fell 4.9% in the
fourth quarter from a year earlier. That unit has slipped in key
businesses including U.S. mergers and last fall named a new
head.
Trading revenue fell 5.8%. Competitors also posted trading
declines due to market volatility in late 2018.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
January 16, 2019 08:29 ET (13:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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