Net Profit Surge: Bank of America more than doubled its net profit in the fourth quarter to $6.7 billion, a 112% increase year-over-year, with EPS rising to $0.82.
Key Growth Drivers
- Investment Banking: Revenue from investment banking grew 31%, reaching $6.2 billion, driven by strong performance in mergers and acquisitions.
- Loan Growth: Outstanding loans increased 4% to $1.1 trillion, surpassing competitors, with average loans and leases rising 3% to $1.08 trillion.
- Trading Revenue: Trading revenue rose 13% to $4.1 billion, fueled by fixed income, currency, and commodities (FICC).
- Deposits: Average deposits grew 3% to $1.96 trillion, reflecting continued client confidence.
Interest Rates and Net Interest Income: Net interest income rose 3% to $14.5 billion, exceeding estimates by $170 million, supported by fixed-rate asset repricing and deposit growth. Investors are closely monitoring the bank’s 2025 NII targets, given its sensitivity to rate movements and revised expectations for delayed rate cuts.
Operational and Financial Strength
- The efficiency ratio improved to 66%, down from 81% in 4Q23.
- Return on average common equity (ROE) rose to 9.4%, while return on average tangible common equity (ROTCE) increased to 12.6%.
- The Common Equity Tier 1 (CET1) ratio stood at 11.9%, above the regulatory minimum of 10.7%, showcasing a strong capital position.
Broader Industry Context: The positive results align with strong performances reported by other US banks such as Goldman Sachs, Citigroup, JPMorgan Chase, Wells Fargo, and BlackRock. It also outpaced competitors in deposit and loan growth, demonstrating resilience in a competitive environment.
