CHARLOTTE, USA (AP) — Bank of America’s (BofA) fourth-quarter profits fell 18 per cent from a year ago as lower interest rates weighed down its results. The bank, however, was able to release more than US$800 million from its credit reserves – a sign that it sees the US economy improving in the coming months.

The North Carolina-based bank said Tuesday that it earned a profit of US$5.47 billion or 59 cents a share, down from US$6.99 billion or 74 cents per share in the same period a year earlier. Analysts were expecting BofA to earn 56 cents a share, according to Zacks Investment Research.

Like its Wall Street competitors, Bank of America was able to release hundreds of millions of dollars from its loan-loss reserves — money the bank had set aside earlier in the pandemic to cover loans that might be now be unpayable. But as the economy has relatively improved, banks have been able to free up some of those reserves.

In the quarter, BofA released US$828 million from its credit reserves. This type of release goes straight to a bank’s bottom line but it’s largely because the money was moved out of an escrow-like account and was now free to be used again.

Low interest rates were the biggest drag on BofA’s results compared to last year. The Federal Reserve sharply cut rates once the pandemic hit. Bank of America’s balance sheet is heavily weighted toward short-term interest rates, so it was hit harder than the rest of its competitors. Interest revenue in the quarter dropped from US$12.14 billion to US$10.25 billion.

In a separate release, Bank of America’s board of directors announced the bank would buy back US$2.9 billion worth of stock in the upcoming quarter as well as pay a quarterly dividend of 18 cents per share. Share buyback had been on hold through much of last year when the Federal Reserve required all large banks to hold on to cash to brace for the economic downturn caused by the pandemic.