After Goldman Sachs’ results for the fourth quarter of 2021 yesterday, today it’s the turn of two Wall Street heavyweights: Bank of America and Morgan Stanley. The group led by Brian Moynihan showed strong accounts, driven by loan growth and the scale of mergers and firms. Trading is a bit disappointing.
Bank of America announced that net income from September to December 2021 rose 28% year-over-year to $7 billion, up from $5.5 billion in the same period a year earlier. Translator: Earnings per share rose 39% to 82 cents, beating the Refinitiv consensus (77 cents). Instead, business volume, net of interest expense, rose 10% to 22.17 billion, although it did not miss the estimate of 22.2 billion placed by analysts. Summing up for the full year, the company reported net profit of 32 billion (+78%) and revenue, net of interest expense, of 89.1 billion (+4%).
“Our results for the fourth quarter were driven by strong organic growth, record levels of digital engagement and an improving economy,” said Moynihan, CEO of Bova. “We increased loans by $51 billion and added $100 billion in deposits during the quarter, strengthening our position as a leader in retail deposits.”
Analyzing balance sheet data for the second largest bank by assets in the United States, interest margin (a measure that measures the difference between interest earned on loans and paid on deposits) rose 11% to 11.4 billion. Growth in loans and deposits. On the other hand, the retail banking sector had a turnover of 8.9 billion (+8%). Average loans rose above expectations to 945 billion, while average deposits increased to $2 trillion.
The global wealth management and investment division generated record revenue of €5.4 billion, an increase of 16%, with asset management and brokerage fees rising. In global banking, total investment banking fees rose above expectations 26% to 2.4 billion on the back of mergers and rushes, driven by a combination of low-cost financing for buyers and attractive valuations for sellers. Consulting fees hit a record high of 850 million (+55%). In turn, the sales volume of the Global Markets division shrank by 2% to 3.8 billion. Unlike Goldman Sachs, earnings from stock trading rose 3% in the quarter, while fixed income, currency and commodity trading revenue fell 10% as stock prices continued to rise.
“We hit a record $32 billion in 2021, with every line of business contributing strongly,” Moynihan said. “In the consumer segment, we added millions of new credit card accounts and nearly a million new new checking accounts. The Wealth Management division experienced record customer inflows and the strongest customer acquisition numbers since before the pandemic. L”Investment banking was its best ever, and the unit achieved Global markets have had the highest sales and trading returns in the past decade, driven by the record-breaking performance of stocks as we invested in the business.”
Finally, as the risk of credit default continues to decline, Bank of America has decided to release $851 million of its previously earmarked reserves for potential pandemic-related losses. On the cost side, it’s worth noting that non-interest expenses rose 6% to 14.7 billion as a result of higher employee compensation, lower than competitors JPMorgan and Goldman Sachs. Wage inflation has been one of the hot topics that emerged from the recent quarterly reports of major US banks. However, unlike its Wall Street rivals, Bank of America said it expects stable spending by 2022. Markets are rising and today the Charlotte-based giant’s stock rose 0.4% to $46.46. (All rights reserved)
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