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Brian Moynihan, Bank of America, speaking at the WEF at Davos, January 21, 2020
CNBC
Bank of America on Tuesday reported fourth-quarter profit that exceeded analysts’ expectations as the firm released some of the cash it had set aside for loan losses.
The firm said profit fell 28% to $5.47 billion, or 59 cents a share, compared with the 55 cent estimate of analysts surveyed by Refinitiv. Revenue fell 10% to $20.2 billion, missing the estimate by about $500 million.
The bank said it released $828 million in reserves, resulting in a $53 million provision for credit losses in the final quarter of 2020. The firm had booked $11.3 billion worth of provisions in the previous three quarters.
“In the fourth quarter, we continued to see signs of a recovery, led by increased consumer spending, stabilizing loan demand by our commercial customers, and strong markets and investing activity,” CEO Brian Moynihan said in the release. “The latest stimulus package, continued progress on vaccines, and our talented teammates – who performed well helping their customers through this crisis – position us well as the recovery continues.”
Last week, rivals JPMorgan Chase and Citigroup each posted profit that beat analysts’ expectations as the firms released a combined $4.4 billion in loan-loss reserves.
Like JPMorgan, which posted record fourth-quarter results in its investment bank, Bank of America could also see a boost from its trading operations.
Early Tuesday, Bank of America said that it planned to repurchase $2.9 billion in shares in the first quarter, plus about $300 million in shares to offset stock given to employees. It also said it would maintain its 18 cent quarterly dividend.
Shares of Bank of America dropped 15% in 2020, compared with the 4.3% decline of the KBW Bank Index.
Here’s what Wall Street expected:
Earnings: 55 cents a share, 26% lower than the year-earlier period, according to Refinitiv.
Revenue: $20.7 billion, 8.1% lower than a year earlier.
Net Interest Margin: 1.74%
Trading Revenue: Fixed Income $2.11 billion, Equities $1.22 billion
This story is developing. Please check back for updates.
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