Bank of America profit beats estimates on trading strength

Bank of America Corp posted a drop in fourth-quarter profit on Tuesday that still topped Wall Street expectations as strength in its sales and trading business offset weakness in its consumer banking unit.

Net income applicable to common shareholders fell to $5.21 billion, or 59 cents per share, for the quarter ended Dec. 31 from $6.75 billion, or 74 cents per share, a year earlier.

Analysts on average had expected a profit of 55 cents per share, according to the IBES estimate from Refinitiv.

The second-largest US bank by assets, seen as an economic bellwether, reported a 13% fall in consumer banking revenue to $8.2 billion, citing lower rates and a fall in credit card activity.

Lower interest rates have limited how much banks can charge for their lending services at the same time fiscal stimulus program and flagging consumer confidence has softened loan demand.

Net interest income at the bank, a key measure of how much it can make from lending, sank 16%. The bank reported a 10% fall in overall revenue, net of interest expense, to $20.1 billion.

The bank relies on higher interest rates to drive its profit growth as it has a large pool of deposits and rate-sensitive mortgage securities.

In a sign of confidence in the economic recovery, however, the bank released $828 million from its credit reserves for bad loans after adding more than $8 billion through the first three quarters of the year.

"The latest stimulus package, continued progress on vaccines ... position us well as the recovery continues," Chief Executive Officer Brian Moynihan said.

The bank's sales and trading unit proved a bright spot, with revenue rising to $3 billion from $2.8 billion a year earlier, mirroring peers JPMorgan Chase & Co and Citigroup Inc .

Separately, the second-largest US bank said its board approved a $3.2 billion share repurchase program in the first quarter after getting a green light from regulators to resume buybacks last month.