Bank of America's traders had a good year — but not as good as their rivals.
Revenue from sales and trading rose 7% to $3.06 billion in the fourth quarter, missing analysts' $3.15 billion forecast. The division, helmed by Jim DeMare, was hurt by unexpected weakness in fixed-income trading. JPMorgan Chase, meanwhile, reaped a windfall from frenetic trading and volatile markets during the pandemic.
Fixed-income revenue slumped "as weaker trading performance in macro products and mortgages outweighed gains in credit," the bank said in a statement.
Investment bankers and traders have carried the load for their firms this year as consumer divisions came under pressure from the COVID-19 outbreak that shut down businesses and put millions out of work. After setting aside tens of billions of dollars to cover potential loan losses during the crisis, the largest lenders have fared surprisingly well. They even got approval last month from the Federal Reserve to buy back shares.
Bank of America said its board authorized the repurchase of $2.9 billion of shares through March, the most allowed under Fed guidelines.
Bank of America shares fell 1.6% to $32.48 at 7:26 a.m. in early New York trading.
Investment banking fees jumped 26% to $1.86 billion, beating the $1.62 billion estimate. The division, led by Matthew Koder, benefited from equity underwriting and mergers and acquisitions fees during the quarter.
The Charlotte, N.C.-based company's net interest income, or revenue from customer loan payments minus what the company pays depositors, decreased 16% to $10.3 billion.
Also in the fourth-quarter results:
The efficiency ratio, a measure of profitability, improved to 69% from 71% in the third quarter. Net income fell to $5.47 billion from $7 billion a year earlier. It exceeded the $4.9 billion estimate of 12 analysts. Per-share earnings of 59 cents beat analysts' 55-cent forecast. Total revenue decreased about 10% to $20.1 billion. Bank of America said its board authorized the repurchase of $2.9 billion of shares through March, the most allowed under Fed guidelines.
