Bank of America Q4 earnings jump nearly five-fold

NEW YORK: Bank of America Corp, the second-biggest US lender, said fourth-quarter profit more than quadrupled as the company quelled claims tied to defective mortgages. The results beat Wall Street estimates, and the stock rose 2.6% in New York.

Net income of $3.44 billion, or 29 cents a diluted share, rose from $732 million, or 3 cents, a year earlier, according to a statement from the Charlotte, North Carolina-based firm. The average estimate of 27 analysts surveyed by Bloomberg was 27 cents, adjusted for one-time items. For the full year, profit more than doubled to $11.4 billion.

Chief executive officer Brian T Moynihan, 54, has spent his four years atop Bank of America resolving disputes tied to shoddy home loans and foreclosures, mostly from his predecessor's 2008 takeover of Countrywide Financial Corp. He signaled in November that attention is shifting from the mortgage cleanup to improving performance at operating units, calling his firm a "huge battleship" that is gaining speed.

"They're looking considerably better than a year ago," said Marty Mosby, a bank analyst at Guggenheim Securities with a neutral rating on the stock. "The Street now believes their story, which is that remaining mortgage costs will be manageable."

Bank of America advanced to $17.21 at 8:49 am in New York. The lender rose 34% last year, just under the 35% gain of the 24-company KBW Bank Index. The shares added 7.7% this year through Tuesday as analysts including Citigroup's Keith Horowitz upgraded the firm to a buy in anticipation that costs will recede.

The bank showed improvements in various performance gauges as revenue in the quarter rose 14% to $22.3 billion, excluding accounting charges. Adjusted net interest income increased 4%, according to the bank, and non-interest income jumped 28% as costs eased for refunds to investors on defective mortgages.

The net interest margin, the difference between what a bank pays for funds and what it earns on loans and investments, improved to 2.56% from the 2.44% reported in the third quarter and 2.35% a year earlier.