Bank of America Corp reported a bigger-than-expected fourth-quarter profit on Friday, helped by a surge in net interest income as the U.S. Federal Reserve raised rates through most of last year.

The ‘higher-for-longer’ rate environment to battle decades-high inflation has underpinned profits at consumer banks, with analysts expecting those gains to peak in 2023 and help offset sluggish dealmaking as well as bigger loan loss provisions.

Bank of America’s net interest income (NII) — a metric that measures the difference between the interest earned on loans and paid out on deposits — surged 29% to $14.7 billion in the quarter.

Its profit applicable to common shareholders rose 2% to $6.9 billion, or 85 cents per share. Analysts, on average, had estimated a profit of 77 cents per share, according to Refinitiv IBES data.

The bank’s revenue, net of interest expense, increased 11% to $24.5 billion.

“We ended the year on a strong note, growing earnings year over year in the fourth quarter in an increasingly slowing economic environment,” Chief Executive Brian Moynihan said in a statement.

US banks get ready for shrinking profits and recession

The economic outlook darkened in 2022 as the Russsia-Ukraine conflict, high inflation and growing fears of a recession prompted lenders to set aside bigger reserves for bad loans and also cast a pall over capital markets, curbing investor appetite for deals and straining investment banking units.

Bank of America’s investment banking fees more than halved to $1.1 billion in the quarter, taking some shine off the gains in its consumer business.

The bank added $403 million to its net reserve build. That compares with a net reserve release of $851 million a year ago.

Bank of America’s shares were up 0.3% in premarket trading. The stock lost about 25.5% last year.