The recent rate hike from the U.S. Federal Reserve might have been too late to impact the fourth-quarter of the major banks, but it sets an optimistic outlook for the industry. One of the better positioned banks out of the group, Bank of America Corp. (NYSE: BAC), reported its earnings on Friday morning along with JPMorgan and Wells Fargo.
Overall, these major banks are seeing handy gains in their share prices on perhaps the most unlucky day of the year. The question remains whether these results will set the tone for the rest of the earnings season. Right now the sentiment is positive.
From November 8 to Thursday’s close, Bank of America shares ran about 35%. Considering these earnings, slowing down does not seem like an option.
Bank of America posted $0.40 in earnings per share (EPS) and $20.0 billion in revenue, versus consensus estimates from Thomson Reuters of $0.38 in EPS and revenue of $20.85 billion. In the same period of last year, the bank posted EPS of $0.27 and $19.56 billion in revenue.
During the quarter, loan balances increased by $19 billion year over year to a total of $915.9 billion. Deposit balances increased $64 billion to $1.26 trillion.
The provision for credit losses declined to $774 million from $810 million, and at the same time net charge-offs declined to $880 million from $1.1 billion.
Book value per share rose 7% to $24.04, while tangible book value per share rose 9% to $16.95, when compared to the same period of last year.
The Basel 3 Common equity tier 1 capital totaled $162.8 billion, with a ratio of 11.5%.
The bank repurchased $5.1 billion in common stock and paid $2.6 billion in dividends, making a total of $7.7 billion returned to shareholders. Looking ahead, the bank also increased its repurchase plan for the first half of 2017 to $4.3 billion from the previous level of $2.5 billion.
Brian Moynihan, CEO of Bank of America, commented:
We had strong results in 2016 because our strategy is working. We are lending more and seeing historically low charge-offs, which is what responsible growth is all about. Revenue was up modestly, but EPS grew by 15% as we continued to manage our expenses and create operating leverage. With strong leadership positions in our businesses against a backdrop of rising interest rates, we are well-positioned to continue to grow and deliver for our shareholders in 2017.
Shares of Bank of America were last seen up about 1.8% at $23.33 on Friday, with a consensus analyst price target of $24.06 and a 52-week trading range of $10.99 to $23.41.