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Its
net interest income (NII) - the difference between what banks
earn from loans and pay to depositors - fell 5% to $13.9 billion
as the company spent more to keep customer deposits and demand
for loans stayed subdued amid high interest rates.
After a windfall year in 2023, BofA expects NII to dip to a
trough in the first half of this year and grow in the second
half, CEO Brian Moynihan told investors last month.
The Federal Reserve is expected to cut interest rates this year
after a rapid pace of tightening in 2023. While lower rates will
pressure the interest that banks make off loans, it could mean
less spent on deposits and more demand for borrowing.
BofA took a pre-tax charge of $2.1 billion in the fourth quarter
to pay a "special assessment" fee to replenish a Federal Deposit
Insurance Corporation (FDIC) fund that was drained by $16
billion to cover depositors of two banks that collapsed in 2023.
Bank of America will also take a charge of about $1.6 billion in
the fourth quarter as it phases out a Bloomberg interest rate
benchmark used in some commercial loan contracts. That amount is
expected to be recognized back into its interest income through
2026, BofA said.
The second-largest U.S. lender posted net income of $3.1
billion, or 35 cents a share, for the three months ended Dec.
31. That compares with $7.1 billion, or 85 cents a share, a year
earlier.
Bank of America also reported lower unrealized losses on
securities held until maturity, helped by a rally in bond
markets. The bank had unrealized losses of almost $98 billion in
the fourth quarter, down from paper losses of $131.6 billion in
the third quarter.
"Strong capital and liquidity levels position us well to
continue to deliver responsible growth in 2024," said CEO Brian
Moynihan.
(Reporting by Mehnaz Yasmin in Bengaluru, editing by Lananh
Nguyen and Devika Syamnath)
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