Jan 13 (Reuters) – Financial institution of America Corp (BAC.N) reported a bigger-than-expected fourth-quarter revenue on Friday, helped by a surge in web curiosity revenue because the U.S. Federal Reserve raised charges by way of most of final 12 months.
The ‘higher-for-longer' price atmosphere to battle decades-high inflation has underpinned earnings at shopper banks, with analysts anticipating these positive aspects to peak in 2023 and assist offset sluggish dealmaking in addition to greater mortgage loss provisions.
Financial institution of America's web curiosity revenue (NII) — a metric that measures the distinction between the curiosity earned on loans and paid out on deposits — surged 29% to $14.7 billion within the quarter.
Its revenue relevant to widespread shareholders rose 2% to $6.9 billion, or 85 cents per share. Analysts, on common, had estimated a revenue of 77 cents per share, in line with Refinitiv IBES knowledge.
The financial institution's income, web of curiosity expense, elevated 11% to $24.5 billion.
“We ended the 12 months on a robust observe, rising earnings 12 months over 12 months within the fourth quarter in an more and more slowing financial atmosphere,” Chief Government Brian Moynihan mentioned in an announcement.
The financial outlook darkened in 2022 because the Russsia-Ukraine battle, excessive inflation and rising fears of a recession prompted lenders to put aside greater reserves for dangerous loans and in addition solid a pall over capital markets, curbing investor urge for food for offers and straining funding banking items.
Financial institution of America's funding banking charges greater than halved to $1.1 billion within the quarter, taking some shine off the positive aspects in its shopper enterprise.
The financial institution added $403 million to its web reserve construct. That compares with a web reserve launch of $851 million a 12 months in the past.
Financial institution of America's shares have been up 0.3% in premarket buying and selling. The inventory misplaced about 25.5% final 12 months.
Reporting by Manya Saini in Bengaluru and Lananh Nguyen in New York; Enhancing by Savio Dsouza
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