Post by The Big Daddy C-Master on Apr 15, 2016 12:10:38 GMT -5
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Shares of Bank of America Corporation (BAC), the second-biggest U.S. lender by assets, are trading more than 1% lower than the pre-market session Thursday, after the bank reported a 13% year-over-year decline in the first-quarter profits, owing to weak trading and underwriting revenue.
Combined with a 30% rise in provisions for credit losses, mostly tied to risky energy loans, the Charlotte, NC-based bank earned $2.68 billion, or 21 cents a share in the quarter that ended March, down from $3.1 billion, or 25 cents a year earlier. On an adjusted basis, when taking out one-time gains and costs, earnings came to 20 cents per share, a penny shy of consensus estimates of 21 cents. (See also: JP Morgan Chase & Co. Vs. Bank of America Stock.)
Fourth quarter revenue of $19.5 billion fell 6.7% year-over-year, missing the $20.3 billion analysts expected. Beyond the low-interest rate environment that has pressured the bank's ability to make money on loans and other banking services, revenue was impacted by a 16% year-over-year drop in Bank of America's trading business, which came in at $3.8 billion versus estimates of $3.29 billion. The bank's fixed income revenue and equities revenue were also lower by 17% and 11%, respectively. But it wasn't all bad, as CEO Brian Moynihan pointed out.
"This quarter, we benefited from good consumer and commercial banking activity. Our business segments earned $4.5 billion, up 16% from the year-ago quarter," said Moynihan in a press release. "This was partially offset by valuation adjustments from lower long-term interest rates and annual compensation expenses. Despite volatile markets, our Global Markets business produced solid earnings. As always, we are focused on loan and deposit growth and managing expenses."
Moynihan, since being appointed CEO in 2010, has focused on getting the bank back on track by working to bring synergies with Countrywide Financial Corp. and Merrill Lynch & Co., two acquisitions made by his predecessor, Ken Lewis. But legal costs and low interest rates have weighed heavily on this transition. And the rising costs from energy loans have recently increased the challenge. ( See also: A Look at Bank of America's Energy Exposure.)
The Bottom Line
It wasn't a great quarter, but with Bank of America's expenses declining 6.4% to $14.8 billion, the transition towards a leaner business continues for Moynihan. And the fact that consumer-banking profit climbed 22%, while profit at the wealth-management division rose 13%, suggests that the Bank of America will survive.
Shares of Bank of America Corporation (BAC), the second-biggest U.S. lender by assets, are trading more than 1% lower than the pre-market session Thursday, after the bank reported a 13% year-over-year decline in the first-quarter profits, owing to weak trading and underwriting revenue.
Combined with a 30% rise in provisions for credit losses, mostly tied to risky energy loans, the Charlotte, NC-based bank earned $2.68 billion, or 21 cents a share in the quarter that ended March, down from $3.1 billion, or 25 cents a year earlier. On an adjusted basis, when taking out one-time gains and costs, earnings came to 20 cents per share, a penny shy of consensus estimates of 21 cents. (See also: JP Morgan Chase & Co. Vs. Bank of America Stock.)
Fourth quarter revenue of $19.5 billion fell 6.7% year-over-year, missing the $20.3 billion analysts expected. Beyond the low-interest rate environment that has pressured the bank's ability to make money on loans and other banking services, revenue was impacted by a 16% year-over-year drop in Bank of America's trading business, which came in at $3.8 billion versus estimates of $3.29 billion. The bank's fixed income revenue and equities revenue were also lower by 17% and 11%, respectively. But it wasn't all bad, as CEO Brian Moynihan pointed out.
"This quarter, we benefited from good consumer and commercial banking activity. Our business segments earned $4.5 billion, up 16% from the year-ago quarter," said Moynihan in a press release. "This was partially offset by valuation adjustments from lower long-term interest rates and annual compensation expenses. Despite volatile markets, our Global Markets business produced solid earnings. As always, we are focused on loan and deposit growth and managing expenses."
Moynihan, since being appointed CEO in 2010, has focused on getting the bank back on track by working to bring synergies with Countrywide Financial Corp. and Merrill Lynch & Co., two acquisitions made by his predecessor, Ken Lewis. But legal costs and low interest rates have weighed heavily on this transition. And the rising costs from energy loans have recently increased the challenge. ( See also: A Look at Bank of America's Energy Exposure.)
The Bottom Line
It wasn't a great quarter, but with Bank of America's expenses declining 6.4% to $14.8 billion, the transition towards a leaner business continues for Moynihan. And the fact that consumer-banking profit climbed 22%, while profit at the wealth-management division rose 13%, suggests that the Bank of America will survive.
