The Bank of America (BoA) announced on Friday, January 12th, that its net income was down by over 50% from where it was in the fourth quarter of 2022. BoA’s net income for Q4-2023 came to around 35 cents a share, leading to a total of $3.1 billion compared to 2022’s $7.1 billion.

Bank executives say that this was the result of a pre-tax charged as part of the shift from the London Interbank Offered Rate. The said pre-tax amounted to $1.6 billion for the fourth quarter of last year.

This decrease in BoA’s net income may also be attributed to an additional fee of around $2.1 billion paid to the Federal Deposit Insurance Corporation (FDIC) to make up for losses caused by the failure of Signature Bank and Silicon Valley Bank in March last year.

The bank’s consumer banking revenue was also down by 4%. Sales and trading revenues, however, were up by 3% to settle at $3.6 billion.

While BoA bucked analysts’ forecasts when it earned 70 cents a share, its overall revenue of $22.1 billion was short of the amount estimated by stock traders, the first time it has happened in two years. Overall revenue was also 10% lower than where it was in Q4-2022.

While financial firms listed on the S&P 500 were up by 10% in 2023, BoA stocks started 2024 down by 2.6% – a dismal showing after gaining just 1.7% last year.

A Marked Underperformance

Many market watchers assumed that BoA was going to make the most of 2023’s soaring interest rates. However, the bank continues to underperform compared to many of its peers. 

Experts point out that this is due to BoA’s foray into long-dated securities with a far lower yield throughout much of the pandemic. Unfortunately, as the Federal Reserve continued to raise interest rates, the value of those securities dwindled significantly.