Bank of America benefits from its merchant banking and the financial health of its customers

Bank of America posted a 30% increase in profit in the fourth quarter, driven by its investment banking and asset management activities, as well as the good financial health of the majority of its retail banking customers. The establishment saw its turnover increase by 10% over the period, to 22.06 billion dollars, while its expenses increased by 6%. Revenues from its asset management and advising businesses wishing to go public, buy or merge with a competitor or raise money have reached a record high.

At the same time, net interest income, the difference between the interest Bank of America earns on loans to its customers and the interest it pays to savers and other creditors, rose 11% thanks to the increase in customer deposits. The total amount of loans granted by the bank increased by 6%.

The group also continued to attract new customers: over the year as a whole, for example, it recorded a net increase of 901,000 new current accounts and 525,000 investment accounts in its retail banking division.

At the same time, Bank of America continued to reduce the reserves set aside at the start of the pandemic to deal with any outstanding payments from its customers, releasing another 851 million in the fourth quarter. In the end, the expected bankruptcies did not take place. The ratio of defaulted loans to the total amount of loans granted by the bank reached in the fourth quarter a level “historically low“, according to the establishment.

Its net profit reached $6.77 billion in the fourth quarter. Reported per share and excluding exceptional items – the benchmark on Wall Street – earnings were posted at 82 cents, above the 76 cents expected. The action rose 3% in electronic trading prior to the opening of the New York Stock Exchange.

Over the full year, Bank of America posted record earnings of $30.6 billion, up 86%. Reported per share and excluding exceptional items ($3.57), it also exceeded expectations. Its turnover rose by 4% to 89.11 billion dollars. 2021 has been a particularly prolific year for the Wall Street giants: although net profits fell at the end of the year, JPMorgan Chase and Goldman Sachs also posted record profits last year.

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