BAML sees net income increase despite slowing economic environment

The bank reported a revenue jump of 11%, allowing for a marginal increase in net income by $100 million to $7.1 billion.

Bank of America (BAML) reported a fourth quarter net income of $7.1 billion, an increase of $100 million compared to the net income of $7 billion achieved in Q4 2021, making it one of the few banks to report positive Q4 2022 results.

The bank reported a revenue, net of interest expense increase by 11% to $24.5 billion. However, non-interest expenses were up by 6% to $15.5 billion which the bank attributed to investments in the franchise across people and technology, partially offset by lower revenue-related incentive compensation.

BAML’s global wealth and investment management arm reported a net income of $1.2 billion, a decrease by 2% from $1.23 billion in Q4 2021. The arm did, however, experience a record fourth quarter revenue of $5.41 billion, up slightly from $5.4 billion in Q4 2021.

Non-interest expenses within the arm decreased by 1% to $3.8 billion, which the bank said was driven by lower revenue-related incentives, partially offset by investments in the business, including strategic hiring and marketing.

BAML’s global markets arm also experienced decreases in net income – a decrease by 25% – from $669 million to $504 million. Revenue did, however, increase by 1% to $3.9 billion, primarily driven by higher sales and trading revenue, partially offset by lower investment banking fees.

On a more positive note, sales and trading revenues at BAML were up by 20% to $3.5 billion compared to $2.9 billion in Q4 2021. Fixed income, currencies and commodities (FICC) earnings were up 37% to $2.2 billion, which the bank attributed to improved performance across currencies, interest rates, and credit products.

Equities earnings also saw an increase, albeit marginally (by 1%), to $1.4 billion.

“We ended the year on a strong note growing earnings year-over-year in the 4th quarter in an increasingly slowing economic environment,” said Brian Moynihan, chair and chief executive of BAML.

“Our earnings of $27.5 billion for the year represent one of the best years ever for the bank, reflecting our long-term focus on client relationships and our responsible growth strategy. We believe we are well positioned as we begin 2023 to deliver for our clients, shareholders and the communities we serve.”