Bank of America profits drop due to US tax reform hit
NEW YORK: Bank of America reported better-than-expected fourth-quarter earnings yesterday on solid loan growth and a lift from higher interest rates, despite a hefty one-time hit associated with US tax reform.
Earnings at the US banking giant tumbled 50.2 percent to $2.1 billion. The bank booked $2.9 billion in one-time costs associated with deferred taxes due to tax reform after previously signaling the hit.
Revenues rose 2.2 percent to $20.4 billion. Higher interest rates boosted results, enabling the bank to make more money on the loans it grants to banks and customers. On the downside, some of the bank’s trading divisions suffered revenue declines due to low volatility.
Consumer banking loans and credit/debit card spending rose during the period, which overlapped the holiday shopping season.
The bank has cut its retail branch footprint compared with a year ago, with more consumers now banking online. The overall headcount is also down from last year. “Client activity was strong across all of our businesses in 2017,” said chief financial officer Paul Donofrio.
“Once again, we delivered positive operating leverage by carefully managing expenses even as we continued to invest in new capabilities and technology that make it easier for our customers to do business with us.”
Shares rose 0.2 percent to $31.30 in premarket trading.