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Consumer Loans Boost BoA Q4 Earnings

Charges from the recently enacted tax laws had an outsized impact on the latest quarterly results from Bank of America, just as they did for its big bank brethren.  But underneath the headlines, earnings and other metrics largely came in above expectations.

Ex the $2.9 billion charge taken in tandem with the new tax changes, earnings were 47 cents a share — three pennies better than the Street expected.  Revenues were up five percent year on year to $21.4 billion but fell short of the $2.5 billion.  Net interest income was up 11 percent, tied to higher interest rates and loan growth.

The total loan growth was six percent for the year.  Consumer banking was up nine percent as a segment, driven by mortgage and credit card segments.  On credit cards, the net charge off ratio was 2.78 percent, a result of what management termed expected seasoning of the portfolio.

Provisions expenses were up $1 billion year on year, with a $292 million charge taken due to a “single name non-US commercial” client.  As has been seen elsewhere, this — according to CNBC.com — is Steinhoff International, which has also impacted Citigroup and JPMorgan.  And as had been seen at those companies, BoA trading revenues were down year on year, off nine percent for the quarter to $2.7 billion.

CEO Brian Moynihan said during the conference call with analysts that digital investments continued; CFO Paul Donofrio stated that the firm has 35 million digital users, with 24 million using mobile devices to access accounts.   The company processed $669 billion in payments in Q4 — annualized, that equates to over $2.5 trillion per year, with digital payments up 10 percent.  He said to “in particular, note P2P payments increasing. They doubled from Q4 2016.”  Mobile also saw growth, and 23 percent of all deposit transactions were done by mobile.

Technology spending should be roughly flat through the year, said management, at about $2.7 billion.

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