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Bank of America slips on Q4 revenue miss; Analysts see ‘some NII headwinds’

Bank of America slips on Q4 revenue miss; Analysts see 'some NII headwinds' © Reuters. Bank of America (BAC) slips on Q4 revenue miss

Bank of America (BAC) reported fourth-quarter revenue figures that trailed analyst estimates, causing shares to fall 2.4% in the premarket.

Earnings per share of 70 cents came in better than the analyst estimate of $0.60. However, the banking giant reported revenue for the quarter of $23.5 billion, missing the consensus estimate of $23.91 billion.

Trading revenue, excluding DVA, was $3.75 billion, just below the consensus estimate of $3.84 billion.

The net interest income (NII) FTE reached $14.09 billion, in line with the consensus. The net interest yield was 1.97%, which was lower than the estimated 2.04%.

“We reported solid fourth quarter and full-year results as all our businesses achieved strong organic growth, with record client activity and digital engagement. This activity led to good loan demand and growth in deposits in the quarter and full-year net income of $26.5 billion,” said Chair and CEO Brian Moynihan.

“Our expense discipline allowed us to continue investing in growth initiatives. Strong capital and liquidity levels position us well to continue to deliver responsible growth in 2024.”

Compensation expenses amounted to $9.46 billion, exceeding the estimate of $9.17 billion.

Evercore ISI analysts noted that the company “could see some NII headwinds.”

“Mostly the same story and reasonable enough quarter & execution in a not so easy backdrop… we think BAC is in mostly good shape coming into 2024,” they wrote in a note.

“That said, while BofA did not provide any forward thoughts on NII (100bps shift down beyond the curve estimated to decrease NII by $3.1bn), we think a falling net interest yield (down 17bps q/q and 34bps y/y) and only modest deposit growth will lead to lower NII estimates vs what’s currently modeled and probably be a short-term headwind for the stock if we’re on point.”

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