(Reuters) – Bank of America reported higher profits on Thursday as its traders benefited from a surge in activity in the fourth quarter, while the lender forecast it would earn more interest income in 2025.
Earnings mirror those of competitors across Wall Street, including JPMorgan, Goldman Sachs, Wells Fargo (NYSE:), and Citigroup (NYSE: ), whose results were driven by stronger equity markets and investment banking.
“Every source of revenue grew, and we saw better growth than deposits and loans in the industry,” CEO Brian Moynihan said. “This broad momentum sets up 2025 very well.”
Net income at the second-largest U.S. lender rose to $6.7 billion, or 82 cents per share. That compared with $3.1 billion, or 35 cents a share, a year earlier.
On an adjusted basis, BofA earned 82 cents per share in the fourth quarter, beating analysts’ expectations of 77 cents per share, according to estimates compiled by LSEG.
The bank’s shares rose 2.7% in pre-sale.
BofA’s sales and trading revenue rose 10% in the quarter, its 11th consecutive quarter of year-over-year growth, as equities jumped 6%, while fixed income, currencies and commodities rose 13%.
Stock markets rallied in the fourth quarter after the US presidential election as investors bet on a more favorable business environment under President-elect Donald Trump.
The stock index had a successful year, closing 23.3% higher in 2024 after rallying to 57 all-time highs.
Meanwhile, Wall Street profits rebounded last year as mergers and acquisitions rebounded from a decade-low volume of deals in 2023.
Bankers are predicting a stronger 2025 for deals, helped by President-elect Donald Trump’s promise to pursue business-friendly policies.
BofA’s investment banking fees jumped 44% to $1.7 billion in the fourth quarter, compared with a year earlier, but its global banking unit’s overall net income fell as staff and technology expenses rose.
Across the industry, global investment banking revenue jumped 26% to $86.80 billion, led by a 33% increase in North America, according to Dealogic. BofA achieved the third highest revenue among banks in the world.
NII WILL CONTINUE GROWING IN 2025
BofA’s net interest income (NII) — the difference between what banks earn on loans and pay out on deposits — rose 3% to $14.4 billion in the quarter, compared with a year earlier, driven largely by market activity, fixed-rate rate on property and loan growth.
The figure beat analysts’ average forecast of $14.27 billion in the fourth quarter.
It is the first time BofA has seen annualized NII growth since the third quarter of 2023.
NII also increased from $14 billion in the third quarter. The bank had forecast NII to be $14.3 billion or more in the fourth quarter.
BofA expects NII of $14.5 billion to $14.6 billion in the first quarter on a full taxable equivalent (FTE) basis, higher than analysts’ expectations of $14.36 billion.
The bank also expects NII to rise this quarter to between $14.5 billion and $14.6 billion and eventually rise in the fourth quarter to a range of $15.5 billion to $15.7 billion.
Higher interest rates have reduced NII in recent quarters as lenders set aside more to retain customer deposits. Moynihan said last month that he expected the NII to rise through 2025.
BofA’s NII is also expected to benefit from fixed income assets and a portfolio of securities that shift into higher yielding assets over time.
A steeper yield curve is also positive for banks because they can borrow money at lower short-term rates and lend at higher long-term rates, increasing their interest income.
BofA shares are up 30.5% in 2024, underperforming rivals JPMorgan, Wells Fargo and Citigroup, as well as the Index.
