Bank of America’s profit rises as credit growth continues to accelerate

Bank of America’s profit rose 28 percent in the fourth quarter of 2021 as record earnings from its investment banking and wealth management businesses offset the impact of low interest rates on its lending business and trade weakness.

The US bank reported earnings of $7 billion, or 82 cents a share, up from $5.5 billion, or 59 cents a share, a year earlier. Revenue increased 10 percent to $22.1 billion. Sales and trading revenue fell 2 percent to $2.9 billion.

Analysts polled by FactSet had forecast earnings of 77 cents on sales of $22.18 billion.

Average loan balances rose 1 percent year over year to $945 billion after falling for most of the past year.

Investment banking fees rose 26 percent year-over-year to $2.4 billion, and wealth management revenue rose 16 percent to $5.4 billion as clients deposited an additional $491 billion with the bank invested.

Operating expenses have become a focal point between banks and their investors this quarter after Wall Street giants JPMorgan and Goldman Sachs reported double-digit increases in spending and warned that spending in 2022 was likely to be even higher to keep up to keep up with wage inflation and fintech competitors.

Higher performance-based pay in BofA’s investment banking and wealth management divisions drove total spend up 6 percent year-over-year. Last month, BofA said it expects costs to rise 1 to 2 percent this year.

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