BofA participates in Wall Street consumer unit trade comeback slips

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(Bloomberg) – Bank of America Corp. is preparing to lower interest rates Pain

The company’s shares declined after it became known that the Consumer Business net income declined 9.7%, which was impacted by falling interest income. Bank of America’s retail division had given the company a boost in recent quarters thanks to the growth in loans and deposits. It was the division’s first drop in earnings in over three years.

“Operating leverage was negative year over year as Bank of America had to cushion the rate cuts,” KBW’s Brian Kleinhanzl said in a message to customers.

Trading sales rose 13%, exceeding analyst estimates. Bank of America, however, continued to experience the smallest increase on Wall Street. JPMorgan Chase & Co. had record bond trading performance in the fourth quarter and Citigroup Inc.’s debt trading skyrocketed growth more than double analysts predicted.

Bank of America shares fell 2.2% to $ 34.53 at 9:42 a.m. in New York. They rose 43% last year, compared to a 32% increase for the 24-member KBW Bank index.

While the largest U.S. lenders ended the year largely positively, fueled by a strong U.S. economy, they also face challenges including central bank rate cuts, slowing growth expectations, geopolitical tensions, and global trade disputes.

“Our results continue to reflect the strength of US consumers in the world’s largest economy,” said Brian Moynihan at a conference call with analysts on Wednesday. “This quarter is also a transition period.” The bank is feeling the effects of falling interest rates in the second half of 2019.

Net interest income, net of customer loan payments less company deposits, decreased 2.9% in the fourth quarter to $ 12.1 billion. Based on a fully taxable equivalent, the value was $ 12.3 billion, exceeding the average estimate from a Bloomberg survey. NII is likely to be “humble” this year, CFO Paul Donofrio said at the call.

The investment banking division of the Charlotte, North Carolina-based company continued its turnaround under Matthew Koder. Investment banking fees rose 9.3% year over year in the third quarter after a blockbuster.

Also in the fourth quarter:

The bank’s efficiency rate, a measure of profitability, improved from 66% in the third quarter to 59%. Net income decreased 3.9% to $ 6.99 billion as the company generated an 11% return on equity. At 74 cents, earnings per share were above the 69 cents average of 13 analysts in a Bloomberg survey.

Contact the reporter about this story: Lananh Nguyen in New York at lnguyen35@bloomberg.net

Contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub, Steve Dickson

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