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Cost cuts boost BofA's profit

Wednesday, July 17, 2013 - 01:16

July 17 - Bank of America's net profit rose 63 percent, helped by cost cuts and increases in investment banking revenue. Fred Katayama reports.

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Bank of America did what the other three biggest lenders have done: posting double-digit gains in income that easily beat analysts forecasts. Helping pump up profits: cost cutting and big increases in investment banking revenue and net interest income. The bank sees costs related to bad mortgages and foreclosures coming down faster than it had previously predicted. And it set aside less money for potentially bad loans. Goldman Sachs analyst Richard Ramsden noted the bank's expense discipline but said, "Bank of America would need strong execution on expenses to achieve consensus earnings per share of $1.30 in 2014." BofA did particularly well in a smaller part of its business: global wealth and investment management, where income rose 38 percent. But unlike its rivals, its fixed income, currency and commodities revenue fell short. It partly blamed that on market conditions for mortgage and municipal bonds. But it says it's positive about the outlook for fixed income trading. Investors have driven BofA's shares up 76 percent in the last 12 months. And the stock is up nearly 20 percent this year. Next up on the calendar for big banks: Morgan Stanley. It reports Thursday.

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Cost cuts boost BofA's profit

Wednesday, July 17, 2013 - 01:16