By Peter Rudegeair
July 17 Bank of America Corp posted a 70
percent jump in quarterly profit, helped by higher stock trading
revenue and lower expenses as Chief Executive Brian Moynihan's
efforts at a turnaround showed early signs of paying off.
Business was stronger in a number of areas for the
second-biggest U.S. bank by assets. Retail brokerage and asset
management income rose 38 percent, while trading income,
excluding an accounting adjustment, jumped 57 percent, it said
on Wednesday. Retail and small business banking income gained 15
The bank's shares added 1.3 percent to $14.10 before the
Across the bank, revenue was up 3.5 percent and operating
expenses fell 6 percent. Moynihan has been trying to boost
revenue by selling more products to customers.
Bank of America unveiled an initiative in 2011 that aimed to
save $8 billion a year, and has set a goal of achieving $1.5
billion in savings per quarter by the fourth quarter of 2013.
Net income for common shareholders rose to $3.57 billion, or
32 cents per share, from $2.10 billion, or 19 cents per share, a
year earlier. Revenue, net of interest expense, rose to $22.73
billion from $21.97 billion.
Analysts, on average, expected earnings of 25 cents per
share, according to Thomson Reuters I/B/E/S.
JPMorgan Chase & Co and Citigroup Inc posted
bigger gains in revenue than Bank of America, but their net
income did not rise as much because of less aggressive
Bank of America's operating expenses fell to $16.02 billion
from $17.05 billion in the same quarter last year.
Sales and trading revenue rose to $4.15 billion, excluding
an accounting adjustment, from $3.73 billion last year. Income
in its global markets unit soared to $935 million from $595
million, excluding the accounting adjustment that allowed the
bank to book gains and losses based on changes in the value of
its own debt.
The sales and trading results were driven by equities sales
and trading, where revenue, excluding the adjustment, rose 53
percent to $1.2 billion.
But fixed income, currency, and commodities sales and
trading revenue fell by $296 million to $2.3 billion. Most other
banks posted gains in bond trading, even as yields rose during
the quarter. But changes in bond yields hurt Bank of America's
mortgage-backed securities business.
Revenue in the global banking division rose 5.9 percent to
$4.14 billion, driven by a 24 percent increase in investment
Revenue in consumer and business banking was little changed
at $7.43 billion, while global wealth and investment management
business increased 10 percent to $4.50 billion on higher asset
Bank of America's shares have risen nearly 20 percent this
year through Tuesday, below the 25 percent increase in the KBW
Net interest margin, a measure of the profitability of its
loans, rose to 2.44 percent from 2.21 percent a year earlier.
Rising interest rates should alleviate pressure on margins,
but that trend will take time to have a material impact on