Brian Moynihan, CEO, Financial institution of America
Scott Mlyn | CNBC
Financial institution of America reported fourth-quarter results on Friday that confirmed greater rates of interest helped the Wall Road big make up for a pointy slowdown in funding banking.
Listed below are the important thing metrics in contrast with what Wall Road anticipated:
- Earnings: 85 cents per share versus 77 cents a share, in line with Refinitiv
- Income: $24.66 billion versus $24.33 billion, in line with Refinitiv
The outcomes have been boosted by sizeable positive factors in curiosity revenue because of greater charges and mortgage development within the fourth quarter. The financial institution reported $14.7 billion of web curiosity revenue, up 29% yr over yr however barely beneath Wall Road expectations of $14.8 billion, in line with StreetAccount.
That achieve helped offset a decline in funding banking charges, which fell greater than 50% to $1.1 billion. That outcome was largely consistent with expectations, in line with StreetAccount.
Nonetheless, the financial institution did information for web curiosity revenue to say no sequentially within the first quarter of 2023.
Shares of Financial institution of America rose 2.2% on Friday.
“The themes within the quarter have been constant all yr as natural development and charges helped ship the worth of our deposit franchise. That coupled with expense administration helped drive working leverage for the sixth consecutive quarter,” CEO Brian Moynihan stated in a press release.
Financial institution of America was alleged to be one of many predominant beneficiaries of the Federal Reserve's rate-boosting marketing campaign. However financial institution shares bought hammered final yr amid considerations a recession was on the way in which.
The financial institution applied a $1.1 billion provision for credit score losses, up $1.6 billion in contrast with the identical quarter in 2021, however stated web charge-offs stay beneath pre-pandemic ranges.
Notably, that was beneath the $2.3 billion provision for credit score losses from rival JPMorgan Chase, however Moynihan stated Financial institution of America is equally anticipating a light recession.
“Our baseline situation contemplates a light recession. … However we additionally add to {that a} draw back situation, and what this leads to is 95% of our reserve methodology is weighted towards a recessionary setting in 2023,” Moynihan stated on a name with buyers.
On the buyer banking entrance, Financial institution of America reported that balances have been roughly flat, whereas bank card and debit spending rose 5% yr over yr. Common excellent steadiness on bank cards climbed by 14%.
Common loans and leases for the entire financial institution rose 10% yr over yr, whereas the identical metric for client banking rose 6%.
The worldwide wealth and funding administration enterprise noticed whole income improve marginally whilst common deposits declined. Internet revenue for the section was down 2% yr over yr.
Income from mounted revenue, forex and commodity buying and selling was one other vivid spot, rising 37% yr over yr.
Previous to the report, Financial institution of America's inventory was up 4% within the first few days of 2023.
