Shares of
Bank of America
were falling Monday after the bank said it would recognize a net noncash pretax charge of about $1.6 billion in the fourth quarter as Bloomberg stops publishing an index for short-term rates that had served as an alternative to Libor, or the London interbank offered rate.
The stock was down 1.3% to $34 on Monday, while the
S&P 500
rose 1.2%. Over the last 12 months, BofA shares have gained 0.3%.
The charge stems from an announcement in November from Bloomberg Index Services that it will stop publishing its Short-Term Bank Yield Index—which BofA and other banks use in various lending agreements—later this year, the bank disclosed in a securities filing. This, in turn, impacted the accounting treatment of certain BofA transactions.
The bank said the $1.6 billion net impact is expected to be recognized back into its interest income largely through 2026.
The announcement Monday arrives ahead of BofA’s fourth-quarter earnings report due Friday. Wall Street is calling for earnings of 58 cents a share and total revenue of $23.84 billion, according to FactSet.
Seaport Research analyst Jim Mitchell isn’t worried about the charge for BofA, adding that the coming departure of the BSBY will have an even smaller impact, if any, on its peers.
“Bottom line, while this accounting hit creates additional noise in 4Q, it does not affect 2024 net interest income and incrementally helps net interest income in 2025 and beyond, which helps offset the very modest impact to capital ratios in 4Q,” Mitchell wrote in a Monday report.
“As a result, we believe investors should look past this issue and continue to focus on the forward fundamental outlook,” he continued.
Write to Emily Dattilo at [email protected]
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