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Jan 15, 2020

BofA joins Wall Street's trading comeback, consumer unit slips

Bank of America beats, Goldman Sachs misses


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Bank of America Corp.’s traders bounced back with their peers.

Trading revenue climbed 13 per per cent to US$2.86 billion, beating analysts’ US$2.76 billion estimate, helped by fixed-income activity. The fourth-quarter results echo those of JPMorgan Chase & Co., which posted a record performance in bond trading Tuesday, and Citigroup Inc., where debt trading jumped by more than double what analysts had forecast.

The biggest U.S. lenders ended 2019 on a high note, buoyed by a strong U.S. economy, resilient consumer spending and a robust labor market. For now, they’ve also weathered major challenges including Federal Reserve interest-rate cuts, expectations of slowing growth, geopolitical tensions and global trade disputes.

“We enter 2020 with momentum,” Chief Executive Officer Brian Moynihan said in a statement.

Net income in Bank of America’s consumer division slid 9.7 per cent to US$3.11 billion as interest income fell. Firm-wide, net interest income -- revenue from customers’ loan payments minus what the company pays depositors -- fell 2.9 per cent to US$12.1 billion in the fourth quarter, matching the average estimate in a Bloomberg survey.

Bank of America’s investment-banking fees rose 9.3 per cent from a year earlier after a blockbuster third quarter. The Charlotte, North Carolina-based company’s investment-banking division continued its turnaround under Matthew Koder.

Bank of America shares rose 0.9 per cent to US$35.65 at 7 a.m. in early trading in New York. They rose 43 per cent last year, compared with a 32 per cent increase for the 24-company KBW Bank index.

Also in the fourth-quarter results:

  • The bank’s efficiency ratio, a measure of profitability, was 59 per cent, compared with 66 per cent in the third quarter.
  • Net income fell 3.9 per cent to $6.99 billion as the firm generated a 11 per centreturn on equity. Earnings per share totaled 74 cents a share, beating the 69-cent estimate of 13 analysts in a Bloomberg survey.