Bank of America profit slips as Fed slashes interest rates
Short-term rates were lowered three times in 2019, to a range of 1.5% to 1.75%.
Bank of America's profit dropped 3.9 percent in the last three months of 2019 as interest-rate cuts by the Federal Reserve rendered new loans less lucrative, posing a challenge to lenders from Wall Street to Main Street. Shares of the lender were little changed following the results.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BAC | BANK OF AMERICA CORP. | 47.04 | -0.47 | -0.99% |
Earnings of 74 cents a share still topped the 68-cent average estimate from analysts surveyed by Refinitiv, as healthy consumer spending eased the impact of declining interest revenue, the Charlotte, N.C.-based company said in a statement. Net income in the fourth quarter was $6.99 billion.
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"The company managed well through a period of transition from rising rates to lower rates over a short period of time," Chief Financial Officer Paul Donofrio said in a statement. "We are also aided by diverse lines of business and operations."
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Earnings in consumer banking, the company's biggest business, tumbled 10 percent to $3.1 billion, largely due to lower interest income. Combined credit and debit-card spending increased 6 percent, with record purchases during the lucrative holiday shopping season.