Bank of America Corp. (NYSE:BAC) reported mixed results for the fourth quarter of its fiscal year. The company reported that its earnings surged 47 percent in the quarter through Dec. 31, rising to $4.34 billion, or 40 cents a share, from $2.95 billion, or 27 cents a share, a year ago. On an adjusted basis, the bank earned 42 cents per share, beating surveyed analysts’ average estimate of 38 cents.
Bank of America missed analysts’ estimates for fourth-quarter revenue. Total revenue rose 2.1 percent to $20 billion, missing estimates of $20.8 billion. Net interest income rose 6.3 percent to $10.3 billion, falling short of the $10.6 billion average estimate. Net interest margin was unchanged from three months earlier and up 2.14 percent from a year earlier at 2.23 percent.
Trading was a highlight for Bank of America in terms of revenue. Wall Street firms benefited from a rebound in fixed-income trading in the last few months of the year. Fixed-income trading revenue for the bank climbed to $1.96 billion, short of analysts’ $2.1 billion average estimate. Chief Financial Officer Paul Donofrio said that fixed-income trading did well in the first two months of the quarter, but tapered off at the end of the year. Equity trading rose 11 percent to $948 million, in line with predictions.
Investment-banking revenue fell 3.9 percent to $1.22 billion, beating the $1.14 billion average estimate of analysts. Consumer-banking profit rose 11 percent from a year earlier to $1.92 billion, while income from credit cards fell 1.8 percent to $1.29 billion. Mortgage revenue almost doubled to $519 million from a year earlier.
During an earnings call with journalists, Donofrio forecast sturdy income growth ahead thanks to rising interest rates. The Federal Reserve’s quarter-point rate increase in December, only the second hike since 2006, is expected to boost lending margins. Donofrio also predicted the bank would produce an additional $600 million in net interest income during the first quarter of 2017.
Bank of America shares have gained about 35 percent since President-elect Donald Trump’s victory on Nov. 8. Investors expect financial firms to benefit from rising interest rates and relaxed regulation. Bond-market volumes and U.S. stocks have soared following the presidential election.