BofA, with its large deposit pool and rate-sensitive mortgage securities, relies heavily on higher interest rates to maximize profits. Revenue rose in three of the lender's four main businesses. Global markets, which includes trading, recorded a fall in revenue as spikes in market volatility toward the end of the fourth quarter made investors wary of making big bets amid fears of global economic growth concerns.
BofA's adjusted sales and trading revenue fell 6 percent, with a 15 percent fall in bond trading revenue overshadowing an 11 percent rise in equity trading.
The slump in bond trading was cushioned by rise in interest income and loan growth. Total net interest income - the difference between what a lender earns on loans and pays on deposits - rose 7.3 percent to $12.3 billion. Average deposits rose nearly 2 percent to $1.34 trillion from the preceding quarter.
Investment banking fees fell 5 percent due to lower debt underwriting and advisory fees. Non-interest expenses fell 1 percent to $13.13 billion as Chief Executive Officer Brian Moynihan streamlines the lender's sprawling operations. Two years ago, Moynihan pledged to cut expenses to $53 billion by the end of 2018 and stick to that level until 2020.
Net income applicable to common shareholders rose to $7.04 billion, or 70 cents per share, in the fourth quarter ended Dec. 31 from $2.08 billion, or 20 cents per share, a year earlier, when it took a nearly $3 billion charge related to changes in the US tax law. Revenue, net of interest expense, rose 11 percent to $22.7 billion.