Bank of America, the second-largest US bank, has reported an eight-fold jump in fourth quarter profit, driven by a steep fall in provisions to cover bad loans.
Net income applicable to shareholders rose to $3.18 billion, or 29 cents a share, from $367m, or three cents a share, in the same quarter of 2012 when profit was dented by about $5 billion of mortgage-related charges.
Analysts had expected earnings of 26 cents per share, according to Thomson Reuters.
"Capital and liquidity are at record levels, credit losses are at historic lows, our cost savings initiatives are on track and yielding significant savings, and our businesses are seeing good momentum," the bank's chief financial officer Bruce Thompson said.
Provisions for credit losses fell to $336m from $2.2 billion in the fourth quarter of 2012.
Revenue excluding accounting adjustments rose 14% to $22.3 billion, while operating costs fell 6% to $17.3 billion.
Bank of America's chief executive Brian Moynihan has focused on cutting costs since he took the top job at the bank in 2010 and announced plans in 2011 to save the bank $8 billion a year.
The bank said today it released $1.2 billion from its reserves to cover bad loans, compared with $900m the same time a year earlier and $1.4 billion in the third quarter.
The bank’s net charge-off ratio fell to 0.68% from 1.4% in the fourth quarter of 2012 and 0.73% in the third quarter.
Investment banking fees increased 9% to $1.7 billion as companies around the world took advantage of record high stock prices to raise equity capital.
Total issues rose 50% in the quarter compared to the same time the previous year, making it the strongest quarter for equity capital raising since the fourth quarter of 2010, according to Thomson Reuters data.
Equity trading revenue rose 27% to $904m from a year earlier.
Bond trading revenue rose 16% to $2.1 billion as stronger results in credit and mortgage products more than offset weakness in rates and commodities, Bank of America said.