Bank of America investment bankers boost earnings as loan income rises

BoA posted fourth-quarter profit that topped analysts’ estimates as lower interest rates are expected to spur borrowing

Author of the article:

Bloomberg News

Katherine Doherty

Published Jan 16, 2025  •  Last updated 0 minutes ago  •  2 minute read

A Bank of America Branch stands in Manhattan on January 12, 2024 in New York City. Photo by Spencer Platt/Getty Images

Bank of America Corp. posted fourth-quarter profit that topped analysts’ estimates as investment-banking fees hit the highest in three years and net interest income outperformed forecasts.

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Investment-banking fees jumped 43 per cent to US$1.69 billion in the fourth quarter, according to a statement Thursday. Net interest income also rose in the quarter, climbing three per cent to US$14.4 billion. That’s more than analysts were expecting for NII, the revenue collected from loan payments minus what depositors are paid. Still, non-interest expenses of US$16.8 billion came in slightly higher than analysts forecast.

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“Every source of revenue increased, and we saw better than industry growth in deposits and loans,” chief executive Brian Moynihan said in the statement.

Bank of America’s results offer another look at how U.S. consumers and businesses are faring as the United States Federal Reserve starts lowering borrowing costs for the first time in almost half a decade. Lenders’ balance sheets overall have remained resilient, though uncertainties remain with geopolitical tensions and changes under president-elect Donald Trump’s administration.

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The second-largest U.S. lender said that its deposits and loans both grew in the fourth quarter, topping estimates. Bank of America’s loans reached almost US$1.1 trillion, higher than the US$1.08 trillion estimate. Lending has been a key focus for investors, with lower interest rates expected to spur borrowing as it becomes less costly. Deposits also grew 2.2 per cent to almost US$1.97 trillion, beating analysts’ expectations for a 1.2 per cent increase.

The company’s strong performance in investment banking also buoyed non-interest income, which climbed 37 per cent to almost US$11 billion. Sales and trading also saw strong momentum, growing 10 per cent to US$4.13 billion during a period of volatile market swings around changing interest rates and the U.S. election. The unit, led by Jim DeMare, also notched an annual record in 2024.

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On Wednesday, JPMorgan Chase & Co. and Goldman Sachs Group Inc. reported earnings that beat analysts’ estimates, with executives pointing to a surge in investment banking and trading boosting results to records. Both banks expect the incoming presidential administration to ease regulatory oversight.

Shares of Charlotte, N.C.-based Bank of America were little changed in early New York trading Thursday.

Looking ahead, the bank is signaling more growth for key metrics, including net interest income. The firm expects NII of US$14.5 billion to US$14.6 billion in the first quarter of 2025, rising to US$15.5 billion to US$15.7 billion in the fourth quarter, according to a presentation Thursday.

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“The biggest part of our confidence as it relates to 2025 comes from our confidence around deposit growth,” chief financial officer Alastair Borthwick said on a conference call with reporters Wednesday. “A pickup in loan demand is consistent with a degree of confidence and optimism around the future prospects of the economy.”

Bloomberg.com

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