Bank of America saw loan growth return with consumers and businesses beginning to take on debt again, while the company’s traders missed analysts’ expectations.
Average loan balances were up 1% in the fourth quarter from a year earlier. Lending has been a key focus for investors after demand remained weak for much of 2021, which is normally a bad sign for banks, but executives attributed depressed borrowing demand to companies and individual customers being flush with stimulus cash.
“Our fourth-quarter results were driven by strong organic growth, record levels of digital engagement and an improving economy,” Bank of America Chief Executive Brian Moynihan said in a statement Wednesday. “We grew loans by $51 billion and added $100 billion of deposits during the quarter, further strengthening our position as the leader in retail deposits.”
The banking giant’s results provide a look at how the U.S. economy fared during the last three months of 2021 as the omicron variant emerged. Average loan and lease balances of $945 billion in the fourth quarter were more than analysts’ estimate of $940 billion. The turnaround signals the economy is holding up even as the COVID-19 pandemic lingers.
Bank of America shares had risen almost 3.5% to $47.87 at 8:38 a.m. in early New York trading. The Charlotte, North Carolina, company had climbed 41% in the past 12 months, compared with a 34% increase for the KBW Bank Index.
Rival JPMorgan Chase, which
At Bank of America, net interest income rose 11% from a year earlier to $11.4 billion.
In sales and trading, Bank of America reported revenue of $2.9 billion, down 2% from a year earlier. Analysts had estimated $3.1 billion. The trading boom set off by the market volatility of COVID-19 is starting to fade, and companies are having to contend with higher costs to prevent employees from defecting.
Investment-banking fees climbed 26% to $2.4 billion as the company’s dealmakers capitalized on a combination of cheap financing for buyers and attractive valuations for sellers, which spurred a wave of acquisitions. Advisory fees totaled $850 million, up 55% from a year earlier.
With the risk of widespread credit defaults fading further, Bank of America released $851 million in reserves in the fourth quarter. That follows a $1.1 billion release in the previous three months. Noninterest expenses rose 6% to $14.7 billion, driven in part by higher compensation. The company said it expects expenses to be little changed in 2022.
Client balances in the Merrill Lynch Wealth Management business rose 14% to a record $3.2 trillion, while assets under management increased 17% to $1.3 trillion.
Net income climbed 28% to $7 billion, or 82 cents a share. Adjusted earnings were expected to total 75 cents a share, the average estimate in a Bloomberg survey.
Companywide revenue totaled $22.1 billion, compared with an average estimate of $22.2 billion.
Debt-underwriting fees rose to $984 million, and equity-underwriting fees declined to $545 million.
