Bank of America Corp has announced a profit of $2.4bn, or $0.20 per diluted share, in its quarter four results. These results include a charge of $2.9bn, or $0.27 per diluted share, related to the Tax Cuts and Jobs Act.
The second largest US bank by assets, reported that revenue, net of interest expense, increased 2% to $20.4bn from $20.0bn. This is its highest since 2006.
Net interest income increased $1.2bn, or 11%, to $11.5bn, reflecting benefits from higher interest rates as well as loan and deposit growth.
Non-interest income decreased $724m, or 7%, to $9.0bn, primarily driven by the impact of the Tax Act and lower mortgage banking income. This was partially offset by higher asset management fees, investment banking revenues and card income.
In a statement, the company said that client activity was strong across all of its businesses in 2017 and it grew average deposits by $47bn, or 4%. It also increased average loan balances in its business segments by $45bn, or 6%.
Shares in Bank of America were up 0.4% in pre-market trading.
The lender joined other large US banks, including JPMorgan Chase & Co and Citigroup Inc, in reporting multibillion-dollar charges because the new law requires them to write down the value its stockpile of deferred tax assets on its balance sheet.
The assets are credits it could have used to pay future income taxes that built up after the 2008 financial crisis. When the maximum corporate tax rate was reduced from 35% to 21% under the Republican tax law, Bank of America and other financial companies had to revalue those credits.
Brian Moynihan, Chief Executive Officer, said: “Responsible growth delivered solid results in 2017. Pre-tax earnings rose 17%, and we continued to close in on our long-term return targets. We gained market share across our businesses while carefully managing credit, risk exposures, and expenses.
“We invested in technology, client engagement, and in our own team, including the $1,000 bonus we announced last month for 145,000 employees. We also shared our success with stakeholders through our high level of funding philanthropic initiatives, our 2 million employee volunteer hours, and our commitment to long-term shareholder value by returning nearly $17bn in capital through common stock repurchases and dividends."