BofA Profit Soars As Expenses Fall To Lowest Since 2008
Bank of America Corp (BAC.N), the No. 2 U.S. bank by assets, reported its biggest quarterly profit in nearly four years on Wednesday as mortgage banking revenue soared and expenses fell to their lowest since the financial crisis.
BofA’s legal expenses, which have totaled at least $70 billion since 2008, dropped for the second straight quarter, suggesting the worst of the bank’s legal problems stemming from the financial crisis was behind it.
Net income attributable to the bank’s shareholders more than doubled to $4.99 billion, or 45 cents per share, in the second quarter ended June 30 from $2.04 billion, or 19 cents per share, a year earlier.
Litigation expenses, which had undermined the cost-cutting initiatives introduced by Chief Executive Brian Moynihan since he assumed the top job in 2010, fell to $175 million from $4 billion a year earlier.
BofA’s shares were up 3.2 percent at $17.68 before the bell.
Analysts on average had expected earnings of 36 cents per share, according to Thomson Reuters I/B/E/S. However, it was not immediately clear if the reported figures were comparable.
“We also benefited from the improvement in the U.S. economy, where we are particularly well positioned,” Moynihan said.
BofA’s non-interest expenses fell 25.5 percent to $13.82 billion in the quarter, while net interest income rose 4.7 percent to $10.49 billion. Overall revenue, excluding adjustments, rose 1.7 percent to $22.12 billion.
The fourth-biggest U.S. mortgage lender said its mortgage banking revenue almost doubled to $1 billion.
Wells Fargo & Co (WFC.N), the biggest issue of mortgages in the United States, reported a drop of 1 percent in revenue from its home-lending business on Tuesday.
BofA said its income from investment and brokerage services rose 3 percent to $3.39 billion, while revenue from bond trading fell 9.3 percent to $2.15 billion.
JPMorgan Chase & Co (JPM.N), the biggest U.S. bank, said on Tuesday its revenue from fixed income trading fell 21 percent.
Banks were expected to report muted results from bond trading as the Greek debt crisis and uncertainty about the timing of a U.S. rate hike unsettled investors.
BofA is less exposed to interest rate-sensitive government securities than some of its competitors, focusing more on trading credit instruments such as corporate bonds.
Goldman Sachs Group Inc (GS.N) and Citigroup Inc (C.N) will report results on Thursday and Morgan Stanley (MS.N) on Monday.