Reductions in income caused by a debit card interchange rate reduction and reduced credit card interest income spurred Bank of America Corp.’s Card Services unit on Jan. 19 to report a 24.3% drop in fourth quarter net revenue, to $4.06 billion from $5.36 billion during the same period last year. Net income also dropped, by 20.9%, to $1.02 billion from $1.29 billion.
Lower revenue, partially offset by reduced credit costs, caused much of the drop in net income, the issuer noted in its earnings release.
Contributing to the decline in revenue was lower noninterest income caused by the implementation of new debit card interchange-fee rules in October as a result of the Durbin amendment to the Dodd-Frank Act, which reduced revenue by $430 million, BofA said.
Average loans for the quarter were $121.1 billion, down 11.4% from $136.7 billion, caused by higher payment volumes, charge-offs, continued noncore portfolio runoff and divestitures, the issuer said.
The provision for credit losses decreased 38.4%, to $1.14 billion from $1.85 billion, reflecting improving delinquencies and collections and fewer bankruptcies as a result of improving economic conditions and lower loan balances, BofA said.
What do you think about this? Send us your feedback.
