Bank of America (BAC) Q4 earnings beat Street view; revenues drop

Bank of America (NYSE: BAC) reported stronger-than-expected earnings for the fourth quarter of 2019, despite a decline in revenues amid broad-based weakness. Shares of the financial services giant gained slightly during Wednesday’s premarket session, immediately after the announcement.

Total revenue, net of interest expense, decreased 1% to $22.3 billion from $22.7 billion in the fourth quarter of 2018. The top-line matched the market’s prediction.

Segment-wise Revenue

Segment-wise, Consumer Banking revenues decreased 4%, mainly due to lower net interest income and the absence of a modest one-time gain recorded in the prior-year quarter. Revenues at the Global Wealth and Investment Management unit declined by 2%.

There was a 1% dip in Global Banking revenues during the quarter when higher leasing-related revenue and investment banking fees were more than offset by lower net interest income. Meanwhile, Global Markets revenues moved up 6%.

During the three-month period, net interest income dropped 3% hurt by lower interest rates, which was partially offset by loan and deposit growth. Book value per share grew 9% annually to $27.32. Average loan and lease balances advanced 6% to $936 billion, with consumer loans and commercial loans growing 7% and 6% respectively. At $1.4 trillion, average deposit balances were up 5%.

Earnings Beat

Net income was $7 billion or $0.74 per share in the December quarter, compared to $7.3 billion or $0.70 per share last year. Analysts were looking for a lower profit.

“In a steadily growing economy marked by solid client activity, our teammates produced another strong quarter and year, allowing us to increase investments in our customers, communities, and employees, while keeping a close eye on expenses. We also delivered for shareholders in 2019 by returning a record $34 billion in excess capital through dividends and share repurchases,” said CEO Brian Moynihan.

Capital Return

In the whole of 2019, the management returned $34 billion to shareholders through dividends and share repurchases.

Bank of America shares started 2020 on a positive note and climbed to the highest level since the recession. The stock has gained 21% in the past twelve months.

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