(Reuters) – Bank of America Corp’s quarterly profit topped analyst estimates on Wednesday as its growing loan book helped it ride out year-end market volatility.
Under Chief Executive Officer Brian Moynihan, the Charlotte-based lender has slashed costs while tightening risk controls, which has boosted profitability but also weighed on some of businesses like investment banking.
US - Bank - Percent - Growth - Loans
The second-biggest U.S. bank benefited from 4 percent growth in loans to consumers and 2 percent growth in loans to businesses in the fourth quarter, allowing it to capture more revenue from higher U.S. interest rates.
Revenue rose in three of the lender’s four main businesses. Global markets, which includes trading, recorded a fall in revenue during the turbulent quarter for markets that mirrored declines at rivals.
Bank - Shares - Percent - Premarket - Trading
The bank’s shares jumped 5 percent to $27.94 in premarket trading on Wednesday.
BofA, with its large deposit pool and rate-sensitive mortgage securities, relies heavily on higher interest rates to maximize profits.
Interest - Income - Difference - Lender - Loans
Its total net interest income, the difference between what a lender earns on loans and pays on deposits, rose 7.3 percent to $12.3 billion. Average deposits rose nearly 2 percent to $1.34 trillion from the preceding quarter.
Results were buoyed by four Federal Reserve interest rate hikes in 2018 and a U.S. strong job market that kept bad loans in check and borrowing healthy. The bank predicted economic growth would slow in 2019 but still remain strong.
Revenue - Market - Turbulence - Customers - Sidelines
Markets-related revenue fell as market turbulence pushed some customers to the sidelines, but a plunge in...
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