Following results from JPMorgan and Citi that suggested the street’s bond traders put up some of the best numbers since the crisis in the fourth quarter, BofA stepped up to bat. Spoiler alert: There’s nothing particularly inspiring in these numbers, although there isn’t anything that’s necessarily “bad”, either.
Q4 EPS was a slight beat at $0.74, net income was $7 billion and revenue net of interest expense came in at $22.35 billion, down 1.5% YoY.
NII beat for a second straight quarter, coming in at $12.3 billion, better than the $12.1 billion analysts were looking for. In the second quarter of 2019, Bank of America posted net interest income that missed the lowest estimate. Q1 2019 was the high-water mark for Fed-assisted NII boosts. Banks came into last year expecting higher rates and continuing improvements in margins, but that all changed with the Fed’s dovish pivot.
NII fell $0.4 billion, or 3%, from Q4 of last year, due mostly to lower interest rates, partially offset by loan and deposit growth. There was a “modest” decline from Q3.
In global markets, BofA’s performance was strong, in keeping with its peers. Trading revenue ex-DVA was $2.86 billion, up 14% YoY. That’s marginally better than the $2.76 billion consensus expected. FICC came in at $1.84 billion, up 27% YoY, not as impressive as JPMorgan and Citi, but still good, and better than the $1.68 billion estimate.
Equities trading revenue ex-DVA came in at $1.02 billion, down 4%, and worse than the $1.08 the street was looking for. The bank cites lower levels of client activity in derivatives.
Investment banking revenue was $1.47 billion, up 13% YoY, and slightly better than the $1.42 billion folks were expecting.
Total noninterest expense fell back to $13.2 billion after a Q3 that included a $2.1 billion impairment charge.
The provision for credit losses is $941 million. That’s up 4% YoY, but below estimates ($1.02 billion). The range there was $892 million to $1.18 billion.
Brian Moynihan delivered some wholly perfunctory remarks that described the US economy as “steadily growing”.
In a steadily growing economy marked by solid client activity, our teammates produced another strong quarter and year, allowing us to increase investments in our customers, communities, and employees, while keeping a close eye on expenses. We also delivered for shareholders in 2019 by returning a record $34 billion in excess capital through dividends and share repurchases. As evidenced by a quarter in which our customer deposits surpassed $1.4 trillion and client balances in our wealth management business topped $3 trillion, we enter 2020 with momentum.
All in all, this doesn’t look fantastic. The shares moved a bit higher in the premarket, but this is hardly a blowout. There isn’t anything here on a cursory scan that anyone should be overtly excited about.