(Reuters) - Bank of America Corp's (NYSE:BAC) fourth-quarter profit nearly halved as it booked a $2.9 billion charge stemming from the new federal tax law.
Other large U.S banks, including JPMorgan Chase & Co (NYSE:JPM) and Citigroup Inc (NYSE:C), have also reported charges in their fourth-quarter results because the new law requires them to reassess their deferred tax assets and pay tax on profits kept abroad.
Excluding the tax charge, Bank of America earned $5.3 billion, or 47 cents per share.
According to Thomson Reuters I/B/E/S, excluding the tax charge and another item, the company earned 48 cents per share compared with the average estimate of 44 cents.
Total revenue, net of interest expense, rose about 2 percent to $20.44 billion as gains in interest income helped offset the tax charge and decrease in fixed-income trading revenue.
Trading revenue was weak for U.S. banks in the fourth quarter compared with a year earlier when investors actively changed positions around the U.S. presidential elections. At Bank of America, adjusted trading revenue fell 9 percent from this quarter last year.
The bank's net interest income rose 11.4 percent to $11.46 billion as rising interest rates helped it charge more on its loan.
The Federal Reserve increased the interest rates thrice in 2017 bringing the overnight funds rate to 1.25 percent-1.50 percent.
Bank of America's large stock of deposits and rate-sensitive mortgage securities make the lender particularly responsive to a rise in interest rates.
The bank's non-interest expenses fell 1 percent to $13.27 billion.
The lender's net income, which includes the tax charge, fell to $2.37 billion, or 20 cents per share, for the quarter ended Dec. 31 from $4.54 billion, or 39 cents per share, in the year earlier period.
Bank of America's shares were up 0.4 percent at $31.35 in light premarket trading.
(Reporting by Saumyadeb Chakrabarty)