Bank of America reported $7 billion in net income in the fourth quarter of 2019, closing the year with $27.4 billion in profits over the last 12 months. Much of the bank’s positive performance in the fourth quarter and throughout 2019 can be attributed to strong growth in its residential mortgage business.
The bank noted that, absent a non-cash impairment charge in the third quarter related to the notice of termination of the merchant services joint venture, its annual net profits were $29.1 billion for 2019.
Growth in residential mortgages proved to be a driving force in growing average loans by $21 billion (7 percent) in the fourth quarter, according to the report. The bank found that 45 percent of its total consumer mortgage applications were filed digitally.
BofA held nearly $232 billion of loans in the fourth quarter of 2019, up from almost $210 billion for the same period in 2018.
Commercial loans grew as well, rising 6 percent in the fourth quarter, the report indicates. The bank saw average loan and lease balances in the business segments rise $54 billion (6 percent) to $936 billion.
BofA Chairman and CEO Brian Moynihan expressed enthusiasm regarding the bank’s investment activities in 2019 and its moves to share excess capital to investors.
“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,” Moynihan said in the company’s earnings report. “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.”
The bank’s revenue of $22.3 billion decreased 1 percent in the fourth quarter with net interest income declining 3 percent, driven by lower interest rates, partially offset by loan and deposit growth, the report states. Noninterest income remained stable, despite a modest increase in noninterest expense to $13.2 billion as investments in the franchise continue with an efficiency ratio of 59 percent.
Average deposit balances increased $65 billion (5 percent) to $1.4 trillion in the fourth quarter and the bank’s provision for credit losses increased $36 million (4 percent) to $941 million.