Bank of America Earnings Hurt by Tax-Related Charge
January 17 2018 - 7:28AM
Dow Jones News
By Rachel Louise Ensign
Bank of America Corp. said Wednesday that its fourth-quarter
profit fell from a year ago, hurt by a $2.9 billion charge related
to the tax bill, even as the bank ended a year that put its
crisis-era issues firmly in the past.
The Charlotte, N.C.-based bank reported a profit of $2.37
billion, or 20 cents a share. The charge for the tax bill removed
27 cents a share in the latest quarter.
Analysts polled by Thomson Reuters had expected earnings of 44
cents a share, on an adjusted basis.
Investors are expected to look past the one-time charges because
they are likely to be outweighed by the new tax law's longer-term
benefits. Starting this year, a lower corporate tax rate is
expected to boost Bank of America's profit by 16%, according to
Bernstein analysts.
As recently as 2014, Bank of America's results were dogged by
tens of billions of dollars in penalties over financial-crisis era
issues. Since then, the company's legal problems have eased, and it
has made a concerted effort to cut costs and focus on safer
businesses such as lending to consumers with good credit.
The bank also has had the help of rising interest rates, which
are boosting profits.
The lender's improving fortunes helped lift its stock above $30
a share for the first time since 2008 earlier this year. Shares are
up 84% since the 2016 presidential election, when hopes for
deregulation, tax cuts and rate increases sent stocks in the sector
higher.
Still, the bank had to issue so many new shares to deal with its
crisis-era problems that per-share profits remain far below
pre-2008 levels. And the bank still trades at a lower valuation
than some competitors like JPMorgan Chase & Co.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
January 17, 2018 07:13 ET (12:13 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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