Bank of America’s profits rise five-fold

Bank of America showed considerable progress on expenses and improvement across several key businesses in fourth quarter earnings.

Bank of America shares rose 2.86 per cent to $17.25 shortly ahead of the start of  trading yesterday, even as JPMorgan Chase and Wells Fargo, which reported results Tuesday morning, continued to remain largely flat.

Earnings at the lender stood at $3.4 billion, or $0.29 a share during the fourth quarter, as against $732 million, or $0.03 a share in the year-ago period.

The fourth-quarter results beat the consensus EPS estimate of 27 cents, among analysts polled by Bloomberg.

Net income for all of 2013 came in at $11.4 billion, or $0.90 per diluted share, as against $4.2 billion, or 25 cents a share, during 2012, according to results announced yesterday.

"We enter this year with one of the strongest balance sheets in our company's history," said Bank of America CFO Bruce Thompson in the company's press release.

"Capital and liquidity are at record levels, credit losses are at historic lows, our cost savings initiatives are on track and yielding significant savings, and our businesses are seeing good momentum," Thompson added.

The second-largest US lender posted a near five-fold jump in profit, which sent its stock scaling heights not seen in four years.

The lender said yesterday that it saw fourth quarter 2013 net income of $3.4 billion, resulting in earnings of 29 cents per share.

This is both above the analyst consensus of 26 cents per share as also $732 million, or 3 cents per share, reported this time last year.

Fourth quarter revenue on a non-GAAP basis stood at $21.7 billion, above Street predictions of $21.28 billion and an improvement over the $18.9 billion in revenue it posted the fourth quarter of 2012.

The profit surge came largely due to a decline in the bank's provisions for covering bad loans: the lender said its fourth quarter provision for credit losses was down $1.9 billion to $336 million, a change the bank attributed to improved credit quality as also a $1.2 billion reduction in the allowance for credit losses, as against a $900 million reduction in the allowance in the fourth quarter of 2012.

Forbes quoted CEO Brian Moynihan, as saying, while work remained on past issues, the bank's two hundred forty thousand teammates continued to do a great job winning in the marketplace.