Bank of America Corporation reported fourth quarter earnings
per share of $0.28, beating the street estimates of $0.26 on January 19th.
They reported revenue of $19.53B, which is a 4.3% increase Y/Y. However, the
revenue missed estimates by $250M. The stock initially had a positive reaction,
but since then the market sell off has affected the price. Although some
analyst say BACs expenses remain too high, they are headed in the right
direction, finally being able to move past most of their legal problems from
the recession. The company is becoming more efficient, improving their
efficiency ratio from 88% in 2014 to 68% in 2015. As they lower their expenses
it will improve further.
The bank makes most of its money from net interest income
and non-interest income. We saw net interest income grow in Q4 2015 to $10.5B
from $10.3B in Q3 2015, and $10.4B Q4 2014. Non-interest income was also up to
$9.7B, a 7% increase Y/Y. As for
consumer benefits, CEO Brian Moynihan says spending on credit and debit cards
rose 4% Y/Y, but without the oil decline, it would have risen 5.7%. Putting a
dollar number on it, that's $20M per day in savings to the bank's credit and
debit card customers.
With interest rates rising, that can only help the NII, and
the largest banks will see some gains. BAC saw their best year for earnings
since the Great Recession.
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