Dive Brief:
- Profit at Bank of America fell 4% compared to a year ago, to $7.0 billion from $7.3 billion, the nation’s second-largest bank reported Wednesday in its fourth-quarter earnings call. But the decline was steepest — 9.7% — in BofA’s consumer bank.
- Bank of America, similar to its peers JPMorgan Chase and Citi, got a boost from a rebound in trading, with bond trading revenue surging 25% to $1.8 billion, but that paled next to JPMorgan’s 86% jump in that category, or Citi’s 49% swell. Bank of America's global markets business was the only one of its three major divisions to report a quarterly profit increase, according to CNBC.
- The bank blamed falling interest rates for its 2.9% decrease in net interest income, to $12.3 billion. That drop, however, was tempered by a 4% company-wide jump in deposits and a 6% gain in loans, figures that outpace Citi and JPMorgan Chase.
Dive Insight:
Deposits and loans were among the strengths Bank of America’s top executives highlighted in a press release Wednesday. "Solid client activity in growing loans and gathering deposits helped us offset spread compression," CFO Paul Donofrio said in a statement.
CEO Brian Moynihan called the quarter "one of transition."
"Our results continue to reflect the strength of the U.S. consumer in the biggest economy in the world," he said Wednesday. "As evidenced by a quarter in which our customer deposits surpassed $1.4 trillion and client balances in our wealth management business topped $3 trillion, we enter 2020 with momentum."
Despite the year-over-year decrease in profit, the figures the bank reported Wednesday represented a rebound from its third quarter. Bank of America reported a 19% drop in profit in October, the result of a $2.1 billion one-time impairment charge stemming from the end of its partnership with payment-processing company, First Data.
Bank of America’s revenue fell 2.4% from a year earlier, to $22.3 billion. And its return on average tangible common equity was 15.4% in the fourth quarter, down from 16.3% a year ago. But the bank’s shares surged 43% in 2019.
Digital growth may be another feather in the bank’s cap. Bank of America reported a 10% increase in active mobile users to 29 million. The bank redesigned its mobile app in 2019 to improve navigation and add services through its virtual voice assistant.
Bank of America reported a modest increase in non-interest expenses Wednesday. That may be a metric to watch in 2020, as the bank is set to increase its minimum hourly wage to $20 by the end of this year's first quarter.
