Bank of America tops profit estimates on increased loan demand

• Fourth-quarter profit of the bank soared 30%

• The bank said it released $851 million in reserves

Bank of America (NYSE: BAC) on Wednesday surpassed analysts’ expectations as the fourth-quarter profit soared 30% due to increased loan demand.

The second largest U.S. bank by assets reported profit of $7.01 billion, or 82 cents a share, beating estimates of 76 cents a share, while the revenue rose 10% to $22.17 billion.

The bank said it released $851 million in reserves as its credit quality improved during the quarter.

Shares of the bank rose 2% in midmorning trading.

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The wealth management division of the bank reported 16% increase in revenue to $5.4 billion. Investment banking fees climbed 26% to $2.4 billion, beating estimates of $2.07 billion, according to FactSet.

Equities trading revenue increased 3% to $1.4 billion while fixed income trading fell 10% to $1.6 billion.

Rising interest rates and increased loan demand have worked in favour of Bank of America. The wage inflation, on the other hand, has impacted several bands recently.

Expenses

Noninterest expenses rose 6% to $14.7 billion due to higher wages, the bank said. Last week, JPMorgan Chase said expenses rose 11% in the quarter while it surged 23% for Goldman Sachs.

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JPMorgan said it expects expenses to rise 8% this year while Bank of America expects noninterest expenses to be roughly flat in 2022.

Net interest income of the bank increased 11% to $11.4 billion due to boost in loans and deposits.

Picture Credits: Reuters