Bank of America Corp., which is buying FleetBoston Financial Corp., on Thursday said fourth-quarter profit rose 4 percent, as consumer lending grew, investment banking profit nearly tripled, and bad loans fell.
The Charlotte, North Carolina-based bank said net income rose to $2.73 billion, or $1.83 per share, from $2.61 billion, or $1.69 per share, a year earlier. Revenue on a taxable-equivalent basis rose 9 percent to $9.79 billion.
Analysts polled by Reuters Research, a unit of Reuters Group Plc, on average forecast per-share profit of $1.77.
For all of 2003, Bank of America said net income rose 17 percent to $10.8 billion, or $7.13 per share, from $9.25 billion, or $5.91 per share, in 2002.
The quarter was eventful for Bank of America, the No. 3 U.S. bank, whose Nations Funds unit was already being investigated by regulators for allowing a hedge fund to trade mutual funds illegally.
In what some analysts called a costly move by Chief Executive Kenneth Lewis, Bank of America agreed in October to buy No. 7 rival Fleet for $47 billion. Pending J.P. Morgan Chase & Co.'s $58 billion purchase of Bank One Corp., announced Wednesday, the Fleet purchase would make Bank of America No. 2 among U.S. banks only to Citigroup Inc.
Then late in the year, the bank emerged as a central figure in the widening scandal involving Italian food company Parmalat. The bank had been one of Parmalat's lead bankers.
Bank of America said consumer and commercial banking profit rose 11 percent to $1.91 billion, corporate and investment banking profit nearly tripled to $576 million, asset management profit more than doubled to $262 million, the loss on equity investments declined to $67 million, and other profit fell 94 percent to $41 million.
Bank of America shares closed Wednesday on the New York Stock Exchange at $79.25. The shares have risen 11 percent in the last year, compared with a 14 percent rise in the Standard & Poor's banks index.
Net interest margin, the difference between what Bank of America earns on loans and pays on deposits, fell to 3.39 percent from 3.66 percent a year earlier.
Bank of America said net interest, or lending, income rose 4 percent from a year earlier to $5.75 billion. Non-interest income rose 18 percent to $4.04 billion. The bank said expenses rose 9 percent to $5.28 billion largely because of higher benefits costs, employee incentives and more advertising.
Loans and leases rose 8 percent to $372 billion, deposits rose 7 percent to $414 billion, and assets rose 10 percent to $736 billion.
Non-performing assets fell 43 percent to $3.02 billion. The bank set aside $583 million for bad loans, down 50 percent. and net charge-offs, or loans on which the bank does not expect to be paid back, fell 38 percent to $725 million.