BofA profit jumps 9.4% on fixed-income gain, beats estimates

BANK OF AMERICA's first-quarter profit rose 40 percent on a year-over-year basis, beating estimates, thanks to improved trading revenue.
BANK OF AMERICA's first-quarter profit rose 40 percent on a year-over-year basis, beating estimates, thanks to improved trading revenue.

NEW YORK – Bank of America Corp., the second-biggest U.S. lender, said profit rose 9.4 percent on gains in fixed-income trading revenue and declines in expenses.

Fourth-quarter net income climbed to $3.34 billion, or 28 cents a share, from $3.05 billion, or 25 cents, a year earlier, the Charlotte, N.C.-based company said Tuesday in a statement. Excluding accounting adjustments, profit was 29 cents a share, beating the 27-cent average estimate of 27 analysts surveyed by Bloomberg.

CEO Brian T. Moynihan, 56, is trimming expenses as low interest rates and volatile markets stymie revenue growth. Since taking over in 2010, he’s dealt with charges tied to his predecessor’s acquisitions of Countrywide Financial Corp. and Merrill Lynch & Co., which have contributed to more than $70 billion in costs since the financial crisis.

“We saw solid customer activity in loan growth, deposits, and wealth management asset flows, and we returned more capital to our shareholders,” Moynihan said in the statement. “As we build on this progress, we will continue to invest in the future and manage expenses.”

- Advertisement -

Revenue climbs

Total revenue rose 4.3 percent to $19.5 billion from a year earlier. Expenses fell 2 percent to $13.9 billion, matching the estimate of David Konrad, a Macquarie Group Ltd. analyst.

Adjusted revenue from trading operations rose 11 percent $2.65 billion, driven by fixed income, which climbed 20 percent to $1.76 billion-income. That beat the $1.55 billion average of four analysts surveyed by Bloomberg. Revenue from equities trading slid 3 percent to $882 million. That compares with estimates of $964 million. Net income for the full year more than tripled to $15.9 billion.

Bank of America gained 1.9 percent to $14.73 at 7:36 a.m. in New York. The shares slipped slipped 6 percent in the past year through Jan. 15, compared with the 5.5 percent decline in the 24-company KBW Bank Index.

Bank of America said last month that it would take a $600 million pretax charge in the quarter to redeem $2 billion of trust-preferred securities tied to Merrill Lynch as the instruments lost preferential regulatory treatment. The firm also posted a $290 million charge tied to U.K. tax credits.

No posts to display