BofA Q4 profit jumps on trading boost, sees higher 2025 interest income

Bank of America reported higher profit on Thursday as its traders benefited from a flurry of activity in the fourth quarter while the lender predicted it would earn more interest income in 2025. 

The earnings mirror those of rivals across Wall Street including JPMorgan, Goldman Sachs, Wells Fargo , and Citigroup, whose results were buoyed by stronger equity markets and investment banking. 

"Every source of revenue increased, and we saw better than industry growth in deposits and loans," CEO Brian Moynihan said. 

"This broad momentum sets up 2025 very well." The second-largest US lender's net income rose to $6.7 billion, or 82 cents per share. That compares with $3.1 billion, or 35 cents per share, a year earlier. 

On an adjusted basis, BofA earned 82 cents per share in the fourth quarter, beating analysts' expectation of 77 cents per share, according to estimates compiled by LSEG. 

Shares of the bank rose 2.7 per cent in premarket trading. 

BofA's sales and trading revenue rose 10 per cent in the quarter, the 11th consecutive quarter of year-on-year growth, as equities jumped 6 per cent while fixed income, currencies and commodities rose 13 per cent. 

Equity markets have rallied in the fourth quarter following the US presidential election as investors bet on a more business-friendly environment under President-elect Donald Trump. 

The S&P 500 stock index had a banner year, closing 23.3 per cent higher in 2024 after racking up 57 all-time closing highs. 

Meanwhile, Wall Street profits rebounded last year as mergers and acquisitions recovered from a decade-low in deal volumes in 2023. 

Bankers anticipate a stronger 2025 for dealmaking, helped by President-elect Donald Trump's vow to implement pro-business policies. 

BofA's investment banking fees jumped 44 per cent to $1.7 billion in the fourth quarter, compared with a year earlier, but overall net income for its global banking unit fell as its expenses rose for personnel and technology. 

Across the industry, global investment banking revenue jumped 26 per cent to $86.80 billion, led by a 33 per cent surge in North America, according to data from Dealogic. BofA earned the third-highest revenue among banks globally. 

NII TO CONTINUE TO GROW IN 2025 

BofA's net interest income (NII) - the difference between what banks earn on loans and pay out for deposits - rose 3 per cent to $14.4 billion in the quarter, compared with a year earlier, driven mainly by market activity, fixed-rate asset repricing and loan growth.

The figure beat analysts' mean forecast of $14.27 billion in the fourth quarter. 

That marks the first time BofA has posted year-on-year NII growth since the third quarter of 2023. 

NII also rose from $14 billion in the third quarter. The bank had forecast NII to be $14.3 billion or above in the fourth quarter.

BofA expects NII of $14.5 billion to $14.6 billion in the first quarter on a fully taxable-equivalent (FTE) basis, higher than analysts' expectation of $14.36 billion. 

The bank also expects NII to grow in this quarter to between $14.5 billion and $14.6 billion and eventually climb in the fourth quarter to a range of $15.5 billion to $15.7 billion. 

Higher interest rates had crimped NII in recent quarters as lenders shelled out more to hold onto customers' deposits.

Moynihan said last month that he expects to see NII grow throughout 2025. 

BofA's NII is also expected to benefit from fixed-rate assets and securities portfolio repricing over time into higher-yielding assets. 

A steeper yield curve is also positive for banks as they can borrow money at lower short-term rates and lend at higher long-term rates, bolstering their interest income. 

BofA stock gained 30.5 per cent in 2024, underperforming rivals JPMorgan, Wells Fargo and Citigroup as well as the KBW Bank Index.   

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