BofA earnings beat tempered by concern about weak oil prices
By Sweta Singh
(Reuters) - Bank of America Corp (BAC.N: Quote) joined other lenders in expressing concern about weak oil prices after the No. 2 U.S. bank by assets reported better-than-expected quarterly earnings, helped by a drop in costs and revenue rises in most of its businesses.
U.S. banks, like their global counterparts, have had a rough year as falling oil prices and worries about slowing growth in China contributed to weakness in credit markets, pressuring revenue growth. The new year also started on a grim note as oil prices fell below $30 a barrel and stock prices slumped.
Bank of America said on Tuesday its provision for credit losses in global banking increased by $264 million in the quarter ended Dec. 31, mainly due to higher energy-related charge-offs and reserve increases for energy exposure.
The bank has $21.3 billion in energy-related loans, representing about 2 percent of total loans, Chief Financial Officer Paul Donofrio said on call with reporters.
"As we continue to assess and react to future changes in the energy sector we could see lumpiness that could potentially drive provision expense over $900 million," he said on a later call with analysts.
BofA said its net income attributable to common shareholders rose to 9.8 percent $3.01 billion, or 28 cents per share, in the quarter, helping the bank achieve its highest annual profit in nearly a decade.
On an adjusted basis, the bank earned 29 cents per share, topping analysts average estimate of 26 cents, according to Thomson Reuters I/B/E/S. Continued...