Bank of America said Wednesday that its fourth-quarter profits fell by nearly half from a year ago, as the bank had to book $2.9 billion in charges related to the new tax law. But setting aside those charges, the bank is showing signs that whatever damage was left over from the financial crisis is largely healed.
The consumer banking giant said it earned $2.37 billion, or 20 cents a share, down from $4.54 billion, or 39 cents a share, from the same period a year ago.
Like many banks this quarter, BofA had to write down the value of its stockpile of deferred tax assets on its balance sheet. The assets are basically credits it could have used to pay future income taxes that built up after the 2008 financial crisis, when banks like BofA had billions of dollars in losses from bad mortgages and other toxic investments. Because the maximum corporate tax rate was reduced from 35 percent to 21 percent under the Republican tax law, BofA and other financial companies had to revalue those credits.
Outside of the impact of the tax law, BofA continues to benefit from rising interest rates. Net interest income at the bank rose 11 percent from a year earlier to $11.46 billion.
The bank grew deposits and loans in the quarter, compared with a year earlier, even while closing roughly 100 branches over the last 12 months. The bank's charge-off rate of loans remained low as well at a steady 0.68 percent.
In BofA's other businesses, trading revenue fell 11 percent to $2.5 billion in the quarter. Total revenue at the bank was $20.44 billion, up from $19.99 billion in the same period a year earlier.
— Associated Press
Goldman Sachs Group on Wednesday reported a sharp drop in trading revenue that renewed questions about its ability to revive a moribund profit driver or find business to replace it.
The Wall Street bank posted its first quarterly loss in six years due to huge but anticipated one-time tax charges
Goldman's bond trading unit posted its worst quarter since 2008, with a 50 percent revenue plunge. The declines were widespread across currencies, credit products, interest-rate products, commodities and mortgages, Goldman said.
Equities trading fell 14 percent, even as global stock markets soared. Goldman's customers did not transact very much during the quarter as volatility hovered near historic lows.
Overall, the bank posted a net fourth-quarter loss of $2.1 billion, or $5.51 per share, and took a $4.4 billion charge related to sweeping U.S. tax law changes. Excluding that charge and other one-time items, Goldman recorded earnings per share of $5.68.
Revenue fell 4.1 percent to $7.83 billion, but beat the average estimate of $7.61 billion. Total operating expenses fell 1 percent to $4.73 billion.
Volkswagen hailed a record 10.7 million vehicle sales in 2017, a 4.3 percent rise, but the new total prompted the Renault-Nissan alliance to claim the crown as the world's leading automobile group on Wednesday. Last year's sales by VW, which was the world's biggest carmaker by sales in 2016 but is still dealing with the fallout from a scandal over rigged diesel emissions tests, were lifted by strong gains in China, Europe and South America. However, the Renault-Nissan alliance, which includes Mitsubishi Motors, questioned the VW tally which Renault boss Carlos Ghosn said was lower if heavy trucks were excluded. VW was No. 1 with 10.3 million vehicle sales in 2016, Toyota second with 10.2 million and Renault-Nissan third with 9.96 million. VW said sales in China in December 2017 jumped 17.8 percent to 460,100 vehicles from the previous month, while monthly sales in Europe rose 3.1 percent, driven by Germany. U.S. sales were down 5.2 percent.
Google says humans will now review video from its most popular YouTube creators after recent complaints. The videos being targeted are ones Google packages to advertisers as "preferred" content. While Google has had human reviewers before, it relies heavily on software to flag potential problems. YouTube was criticized for moving too slowly after one of its stars, Logan Paul, posted video of what appeared to be a suicide victim.
8:30 a.m.: Commerce Department releases housing starts for December.
10 a.m.: Freddie Mac, the mortgage company, releases weekly mortgage rates.
Earnings: American Express Co.