Bank of America saw loan growth pick up again, with consumers and companies resuming debt payments, while the company's trading fell short of analysts' forecasts.
In the fourth quarter, average loan balances were up 1% year over year. After demand remained poor for much of 2021, investors turned their attention to lending. This is usually a bad indication for banks, but executives blamed the low borrowing demand on companies and individual clients being loaded with stimulus money.
"Strong organic growth, unprecedented levels of digital engagement, and a strengthening economy drove our fourth-quarter performance," said Bank of America Chief Executive Officer Brian Moynihan in a statement released Wednesday. "During the quarter, we added $100 billion in deposits and grew loans by $51 billion, solidifying our position as the leader in retail deposits."
The bank's statistics offer insight into how the US economy performed in the final three months of 2021 when the omicron variant first appeared. In the fourth quarter, average loan and lease balances of $945 billion exceeded experts' expectations of $940 billion. Even while the COVID-19 outbreak continues, the economy appears to be holding strong.
Bank of America's stock jumped 2.3 % to $47.31 in early New York trading at 6:53 a.m. In the preceding 12 months, the Charlotte, North Carolina-based corporation has risen 41%, compared to a 34% growth for the KBW Bank Index.
JPMorgan Chase, a competitor, revealed last week that both commercial and consumer loans dropped in the fourth quarter compared to the previous year. Consumer loans fell at Wells Fargo, while overall business borrowing increased very modestly.
Net interest income, or revenue from client loan payments less what the company pays depositors, increased 11% year over year to $11.4 billion at Bank of America.
Bank of America reported $2.9 billion in sales and trading revenue, down 2% from the previous year. Analysts had predicted a value of $3.1 billion. The trading boom sparked by Covid-19's market volatility is starting to dissipate, and businesses are facing increased costs to keep personnel from defecting.
Investment banking fees increased by 26% to $2.4 billion as the company's dealmakers took advantage of a mix of low-cost financing for buyers and good valuations for sellers, resulting in a flurry of acquisitions. Advisory fees reached $850 million, up 55% from the previous year.
Bank of America released $851 million in reserves in the fourth quarter as the risk of large loan defaults faded further. This comes after a $1.1 billion release three months prior. Non interest expenses increased by 6% to $14.7 billion, owing to greater compensation. In 2022, the company anticipates little change in expenses, according to the company.
Merrill Lynch Wealth Administration's client balances jumped 14% to a new high of $3.2 trillion, while assets under management increased 17% to $1.3 trillion.