Financial institution of America (BAC) earnings for the fourth quarter of 2020 exceeded expectations
Bank of America reported a fourth quarter profit on Tuesday that exceeded analysts’ expectations as the company released some of the money it had set aside for credit losses.
The bank said earnings were down 28% to $ 5.47 billion, or 59 cents per share, compared to the 55 cents estimate by analysts surveyed by Refinitiv. Revenue was down 10% to $ 20.2 billion and missed estimate by about $ 500 million.
Bank of America stocks fell 1.6% in premarket trading Tuesday.
The bank announced it had released reserves of $ 828 million, resulting in a loan loss provision of $ 53 million in the final quarter of 2020. The company had posted provisions of $ 11.3 billion in the previous three quarters.
“We continued to see signs of recovery in the fourth quarter, led by increased consumer spending, stabilization in credit demand from our commercial customers, and strong markets and investment activity,” said CEO Brian Moynihan in the press release. “The latest stimulus package, continued advances in vaccines, and our talented teammates who have done a good job for their clients during this crisis position us well as the recovery continues.”
Part of the decline in sales was due to the lack of expectations in the commercial division of Bank of America. The company posted fixed income revenues of $ 1.74 billion, compared to an estimate of $ 2.11 billion among analysts surveyed by FactSet, which related to poorer performance in macro products and mortgages.
Stock sales of $ 1.32 billion exceeded the estimate of $ 1.22 billion. It was a relatively subdued performance compared to JPMorgan, which posted record fourth quarter results for its investment bank last week.
Earlier on Tuesday, Bank of America announced that it would buy back shares valued at $ 2.9 billion and shares valued at around $ 300 million in the first quarter to offset the shares made available to employees. It also said it would keep its quarterly dividend of 18 cents.
Last week, rivals JPMorgan and Citigroup each posted profits that exceeded analysts’ expectations as the companies together released $ 4.4 billion in credit risk reserves.
Bank of America stocks fell 15% in 2020, compared with the KBW Bank Index’s 4.3% decline.
Here are the numbers:
- Result: 59 cents per share compared to 55 cents estimate by the analysts surveyed by Refinitiv.
- Revenue: $ 20.2 billion versus an estimate of $ 20.7 billion.