Finishing off fourth-quarter and full-year 2018 financial reports for the four major U.S. banks, shares of Bank of America Corp. (BAC, Financial) soared on Wednesday morning on record profit, which tripled to $7.3 billion.
Driven by strong performance in the consumer banking business and lower taxes, the Charlotte, North Carolina-based bank, which is one of Warren Buffett (Trades, Portfolio)’s largest holdings, posted earnings of 73 cents per share, topping Refinitiv’s estimates of 63 cents. Revenue grew 11% from the prior-year quarter to $22.7 billion, beating expectations of $22.39 billion.
For the year, Bank of America recorded earnings of $2.61 per share on $91.2 billion in revenue.
In a statement, Chairman and CEO Brian Moynihan praised the company’s performance, giving credit to its employees.
“I am proud of our teammates who produced record earnings for the quarter and the year by driving responsible growth,” he said. “Our teammates worked for our customers and delivered solid loan and deposit growth, and other activity, while managing risk well. Operating leverage based on disciplined expense management while investing in our future, solid asset quality and loan and deposit growth drove this quarter’s results.”
For the quarter, Bank of America’s consumer loans grew 4%, loans to businesses rose 2%, average deposits gained nearly 2% and credit and debit card spending expanded 6%.
By segment, net income in the company’s consumer banking division grew 52% from the year-ago quarter to $3.3 billion and revenue increased 10% to $9.9 billion. Sales in its wealth management segment increased 7% and the global banking business saw 1% growth, but the global markets segment’s revenue decreased 5%.
Fixed-income trading revenue also disappointed investors as it declined 15% to $1.4 billion, which was below analysts’ projections of $1.62 billion.
Regardless, Bank of America’s net interest income, a closely watched measure of profitability, grew 7.3% to $12.3 billion. Its net interest yield was 2.48% for the quarter, ahead of the 2.45% analysts were anticipating, and the efficiency ratio improved to 58%.
Moynihan also announced the bank repurchased $2.6 billion worth of common stock during the quarter. Looking ahead, he sees further growth opportunities for each of the bank’s businesses as they are “well positioned to serve clients, teammates and communities.”
“Through the trillions of dollars of consumer transactions we process and from the steady confidence and activity of our small business and commercial clients, we see a healthy consumer and business climate driving a solid economy,” he said.
With a market cap of $278.63 billion, shares of Bank of America were trading 6.93% higher on Wednesday morning at $28.39. GuruFocus estimates the stock tumbled 17% in 2018. It is up approximately 14% so far this year.
Disclosure: No positions.
Read more here:Ă‚
