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Bank of America’s BAC fourth-quarter 2024 earnings of 82 cents per share surpassed the Zacks Consensus Estimate of 77 cents. The bottom line compared favorably with adjusted earnings of 70 cents in the prior-year quarter.
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Behind BAC’s Headline Numbers
Total investment banking (IB) fees (in the Global Banking division) of $985 million surged 43% year over year, driven by growth in underwriting income and advisory services revenues.
Similar to the previous quarters, Bank of America recorded an improvement in trading numbers in the fourth quarter. Sales and trading revenues (excluding net DVA) grew 10% to $4.13 billion. Fixed-income trading fees increased 13%, while equity trading income rose 6%. We had projected sales and trading revenues (excluding net DVA) of $4.11 billion.
These, along with net interest income (NII), were major revenue growth drivers for Bank of America. NII grew on a year-over-year basis, driven by relatively lower interest rates and improvement in loans and deposit balance. Management believes NII will keep growing this year.
On the other hand, provisions and adjusted non-interest expenses increased during the quarter.
The company’s net income applicable to common shareholders soared substantially from the prior-year quarter to $6.4 billion. Our estimate for the same was $6.06 billion.
BAC’s Revenues Improve, Adjusted Expenses Rise
Net revenues were $25.3 billion, which beat the Zacks Consensus Estimate of $25.13 billion. The top line also jumped 15% from the prior-year quarter.
NII (fully taxable-equivalent basis) grew 3% to $14.51 billion. Our estimate for NII was $14.40 billion. Net interest yield remained stable at 1.97%. We expected the metric to be 1.94%.
Non-interest income increased 37% to $10.99 billion. This was driven by higher total fees and commissions, and market making and similar activities. We had projected a non-interest income of $10.86 billion.
Non-interest expenses were $16.79 billion, down 5%. Excluding the FDIC special assessment of $2.1 billion, adjusted expenses rose 8%. Our estimate for non-interest expenses was $16.61 billion.
The efficiency ratio was 65.83%, down from 80.22% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
Bank of America’s Credit Quality Worsens
Provision for credit losses was $1.45 billion, up 32% from the prior-year quarter. We estimated the metric to be $1.57 billion.
Net charge-offs (NCOs) jumped 23% to $1.47 billion. As of Dec. 31, 2024, non-performing loans and leases as a percentage of total loans were 0.55%, up 3 basis points.