Bank of America's profits fell short of expectations, as several costs incurred by the bank in the fourth quarter eroded profits, and revenues from the bank's fixed income traders also suddenly declined, according to Bloomberg.
The bank said net income fell 56% to $3.14 billion, double the 28% decline analysts had expected. The profit decline was due in part to a special assessment from the Federal Deposit Insurance Corp., a $1.6 billion charge related to the finance sector's shift away from the benchmark London interbank offered rate, as well as higher expenses.
Revenues from fixed income, currencies and commodities trading fell 5.8% to $2.21 billion in the fourth quarter, according to what the bank revealed, as clients have been suffering for some time from continued high interest rates and geopolitical tensions.
Bank of America's results also provide a new look at the performance of US consumers and businesses as the Federal Reserve keeps borrowing costs at high levels for longer. Lenders' balance sheets remained generally consistent despite higher interest rates, and most banks raised their closely watched guidance for full-year net interest income.
The second-largest US bank said that net interest income, a major source of the bank's revenue, fell 5% to $13.9 billion in the fourth quarter of last year. Analysts expected a decrease in revenues collected from loan payments, minus what depositors pay, by 5.1%.
The stock price of Bank of America, based in Charlotte, North Carolina, fell 1.7% at in early trading in New York, after falling 3.6% in the past 12 months through Thursday.
Bank of America's non-interest expenses increased 14% compared to the previous year, reaching $17.7 billion. Fees and costs have been a focal point for investors, with continued inflation pressures on spending. Analysts had expected it to increase by 6.8% to $16.6 billion.
On the bright side, stock traders scored a surprise win, after recording revenue of $1.55 billion, up 12% from the previous year.
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