Bank of America profit jumps on M&A boost, loan growth
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
[NEW YORK] Bank of America reported a jump in fourth-quarter profit on Wednesday (Jan 19), benefiting from loan growth and a frenetic pace of global dealmaking activity that helped drive its investment banking business.
After facing constant erosion to their income from loans due to rock-bottom interest rates, US banks are expected to see the easing of some of that pressure as the Federal Reserve hints at raising rates later this year.
Bank of America, the second-largest US bank by assets, will likely be one of the biggest beneficiaries of such a potential move, given its large loan and deposit book, as well as its huge exposure to rate-sensitive mortgage securities, compared with its Wall Street peers.
Net interest income (NII), a metric that measures the difference between the interest earned on loans and paid out on deposits, rose nearly 11 per cent to US$11.41 billion.
During the year, Bank of America rode the global M&A boom to post strong profit, as investment banking businesses closed record volumes of mergers, underwrote several initial public offerings and advised on deals involving special purpose acquisition companies.
The bank also released US$851 million from its reserves for pandemic-related losses that did not materialise.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
Shares of the company were up nearly 2 per cent in pre-market trade.
A recovery in consumer spending on credit and debit cards and a strong performance in the bank's trading and advisory business also helped bolster profit.
Combined spending on credit and debit cards grew 22 per cent to US$212 billion in the quarter, the bank said.
Average loans and leases, excluding those from the government-backed Paycheck Protection Program (PPP), grew 3.4 per cent from the previous quarter and 3.2 per cent from the year-earlier quarter.
For the quarter ended Dec 31, the bank reported revenue, net of interest expense, of US$22.1 billion, up 10 per cent from last year.
Profit rose to US$6.77 billion, or 82 US cents per share, from US$5.21 billion, or 59 US cents per share, a year earlier.
Analysts on average had expected a profit of 76 US cents per share, according to the IBES estimate from Refinitiv.
REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
