Bank of America Sees $1.6B Charge In Q4 On Bloomberg Benchmark Phase-Out
Portfolio Pulse from Lekha Gupta
Bank of America Corp (BAC) anticipates a $1.6 billion non-cash, pretax charge in Q4 FY23 due to the phase-out of a Bloomberg interest rate benchmark. The charge is expected to be recouped into interest income mostly by 2026 as BSBY-indexed loans transition to SOFR. The one-time charge has reduced BAC's CET1 ratio by eight basis points. BAC's Q4 FY23 results will be reported on January 12, 2024. BAC shares dropped 0.50% in premarket trading.

January 09, 2024 | 10:51 am
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Bank of America will take a $1.6 billion charge in Q4 FY23 from the Bloomberg benchmark phase-out, expected to be recovered by 2026. The charge has slightly reduced the CET1 ratio. Shares fell 0.50% premarket.
The $1.6 billion charge is significant and may concern investors about the bank's short-term financial health, leading to a negative impact on the stock price. However, the expectation that this will be recouped and the minimal impact on the CET1 ratio suggest a limited long-term effect.
CONFIDENCE 90
IMPORTANCE 75
RELEVANCE 100