Bank of America's (BAC.N) fourth-quarter profit jumped 47 per cent from a year ago as the nation's largest consumer bank benefited from higher interest rates and lower expenses.

The Charlotte, North Carolina-based bank said it earned a profit of $4.34 billion after payments to preferred shareholders, or 40 cents per share, up from US$2.95 billion, or 27 cents a share, in the same period a year earlier. The results topped analysts' expectations, who were looking for 38 cents per share, according to FactSet.

In BofA's consumer banking division, the bank's largest business by profit and revenue, had net income of $1.92 billion in the quarter, compared with US$1.74 billion in the same period a year earlier. The business had been helped by higher interest rates, as net interest income rose from US$5.23 billion to US$5.47 billion year over year.

Like many consumer banks, BofA struggled to grow profits for the last several years due to record low interest rates. Now that the Federal Reserve has started increasing rates, BofA can charge more for loans.

The Fed's most recent interest rate hike, in mid-December, will benefit BofA going forward.

"While the recent rise in interest rates came too late to impact fourth-quarter results, we expect to see a significant increase in net interest income in the first quarter of 2017," Paul Donofrio, BofA's chief financial officer, said in a statement.

The bank also benefited from the improving health of the U.S. consumer and businesses. The bank set aside less money for bad loans, and its net charge-off ratio, or the per cent of loans that BofA considers unrecoverable, fell to 0.39 per cent from 0.52 per cent a year earlier.

BofA's global markets division also benefited in the quarter, following the stock market rally after the 2016 presidential election. Global markets had net income of US$658 million, compared with US$171 million in the same period a year earlier.

The nation's second-largest bank posted adjusted revenue was US$19.99 billion, which missed Street forecasts. Seven analysts surveyed by Zacks expected US$20.62 billion.

On a full-year basis, BofA had a profit of US$16.22 billion, or US$1.50 per share, compared with US$14.35 billion, or US$1.31 per share, a year earlier. Revenue net of interest expense for 2016 was US$83.70 billion, up modestly from US$82.97 billion the previous year.

Bank of America shares rose 0.3 per cent in early pre-market trading.