Finance

Bank of America posts quarterly profit that exceeds analysts’ expectations but revenue falls short

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Key Points
  • Bank of America reported earnings per share of 59 cents, 4 cents better than the consensus estimate of analysts surveyed by Refinitiv.
  • But revenue of $20.2 billion fell short of the $20.7 billion estimate.
  • Some of the revenue shortfall was from missed expectations in the trading division: The firm posted $1.74 billion in fixed-income revenue, compared with the $2.11 billion estimate of analysts surveyed by FactSet.
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Bank of America on Tuesday reported fourth-quarter profit that exceeded analysts' expectations as the firm released some of the cash it had set aside for loan losses.

The bank said profit fell 28% to $5.47 billion, or 59 cents a share, compared with the 55 cent estimate of analysts surveyed by Refinitiv. Revenue fell 10% to $20.2 billion, missing the estimate by about $500 million.

Bank of America shares fell less than 1%.

The bank said it released $828 million in reserves, resulting in a $53 million provision for credit losses in the final quarter of 2020. The firm had booked $11.3 billion worth of provisions in the previous three quarters.

"In the fourth quarter, we continued to see signs of a recovery, led by increased consumer spending, stabilizing loan demand by our commercial customers, and strong markets and investing activity," CEO Brian Moynihan said in the release. "The latest stimulus package, continued progress on vaccines, and our talented teammates — who performed well helping their customers through this crisis — position us well as the recovery continues."

Some of the revenue shortfall was from missed expectations in Bank of America's trading division. The firm posted $1.74 billion in fixed-income revenue, compared with the $2.11 billion estimate of analysts surveyed by FactSet, on weaker performance in macro products and mortgages.

Equities revenue of $1.32 billion edged out the $1.22 billion estimate. It was a relatively muted performance compared with JPMorgan, which posted last week record fourth-quarter results in its investment bank, and Goldman Sachs, which posted blockbuster equities revenue.

Earlier Tuesday, Bank of America said that it planned to repurchase $2.9 billion in shares in the first quarter, plus about $300 million in shares to offset stock given to employees. It also said it would maintain its 18 cent quarterly dividend.

Last week, rivals JPMorgan and Citigroup each posted profit that beat analysts' expectations as the firms released a combined $4.4 billion in loan-loss reserves.

Shares of Bank of America dropped 15% in 2020, compared with the 4.3% decline of the KBW Bank Index.

Here are the numbers:

  • Earnings: 59 cents a share, vs 55 cent estimate of analysts surveyed by Refinitiv.
  • Revenue: $20.2 billion, vs $20.7 billion estimate.  


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