Dublin-based Bank of America Europe’s earnings drop amid loan loss charge

Bank of America’s EU banking hub in Dublin saw its pretax profit slide 4.7 per cent to $714 million (€646 million) last year as the company set aside $106 million of provisions to cover potential loan losses while the European economy weakened amid rising inflation and the Ukraine war.

Still, net interest income jumped 41 per cent to $579 million at the unit, known as Bank of America Europe, as its loan book grew to $29.8 billion from $27.1 billion and the lender benefited from rising interest rates, particularly on surplus cash left on deposit with central banks.

Money stored at central banks, mainly the European Central Bank (ECB), stood at $18.8 billion last year. The ECB’s deposit rate jumped from minus 0.5 per cent to 2 per cent between July and December, and has subsequently climbed to 3 per cent, with a further rate increase expected next week.

Bank of America Europe, which employees more than 1,000 people in the Republic, including contractors, has two main divisions: global banking and markets and a support services division. The Irish business, led by chief executive Fernando Vicario, had an average of 2,261 employees across Europe last year.

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Net fee and commission income remained steady at $459 million, with a decline in general markets activity understood to have been offset by an increase in market share in the area of mergers and acquisitions activity, even as the level of deal making slumped last year across Europe against a tougher economic backdrop.

Net trading income declined to $169 million from $265 million, understood to have been driven by a decline in earnings in its distressed credit business.

Total operating income in global banking and markets came to $1.85 billion, while support services reported a figure of $178 million.

Bank of America completed the merger of its former main EU bank in London with the Dublin operation in late 2019.

The group, which took over Merrill Lynch at the height of the financial crisis in 2008, was one of the first banks to put in place concrete plans to deal with the uncertainty surrounding the UK’s decision in 2016 to exit the EU. The EU arm’s total assets rose to $72.1 billion last year from $67.4 billion in at the end of 2021.