Fintech

Personal spending chugged along in the fourth quarter, thanks to the resilient job market. But loan charge-offs rose, and higher interest rates suppressed loan demand, executives say.

Surging interest rates, recession threats and weaker stock valuations bogged down merger-and-acquisition activity last year. The 98 announced deals fell short of even 2020, when the pandemic briefly brought the economy to a standstill.

The megabank will report a hit to its earnings this Friday from what one analyst called an "accounting nuisance." The charge, which BofA will make up over time, is due to the bank's use of a Bloomberg-developed interest rate index that gained little traction.

The KBW Bank Index posted a strong gain after a government report showed employers added 216,000 jobs in December. The labor market strength bodes well for lenders' credit quality but may delay highly anticipated interest rate cuts that would lower banks' funding costs.

Bank investors hope they can party like it's 1995, when the U.S. economy stayed healthy even after aggressive Federal Reserve rate hikes. But a few analysts are a bit more cautious over whether banks' loan books will hold up as well this time.

The bank's cross-border transaction service opens a new lane for customer acquisition in an increasingly competitive niche.

Executives at America's largest banks are making rosier predictions about the financial health of U.S. households than they were a year ago, when their forecasts proved to be overly pessimistic.

Funding pressures moderated in recent months, but loan charge-offs climbed. With festering concerns about a vulnerable economy, the potential for elevated credits costs could loom large over the upcoming bank earnings season.

The Bank Term Funding Program, set up in response to this spring's run of bank failures, is poised to close down in March. With the Federal Reserve now forecasting rate cuts next year, the bar for renewing the facility's authorization could be a bit higher.

Remote work trends and high interest rates have substantially reduced the values of U.S. office buildings. A new academic paper estimates the extent of the deterioration, suggesting that there is perhaps more stress ahead for banks than is widely anticipated.