Trading revenue decline hits Bank of America profit
A decline in revenue from trading and lending saw Bank of America’s fourth quarter profit sank 11% year-on-year, despite strong expense controls.
Bank of America Corp.
$36.97
10:59 19/04/24
Chief financial officer Bruce Thompson cited lower legal costs as the "big driver" for the expenses reduction, though he added that even backing that out, non-interest expenses were down 8% from 2013.
The Charlotte-based bank’s earnings fell from $3.44bn to $3.05bn, or 25 cents a share, missing analysts’ estimates of 31 cents a share.
Revenue dropped 13% to $18.7bn, or to $18,9bn on a tax equivalent basis, short of analysts’ expectations of $20.9bn.
The bank, which was hit by hefty legal charges throughout 2014, said its sales and trading revenue dropped 20% to $2.37bn, while a decline in credit and mortgages saw trading revenue from fixed income, currencies and commodities fall 30% to $1.46bn.
"In 2014, we continued to invest in our businesses while reducing expenses and resolving our most significant litigation matters," said group chief executive Brian Moynihan. "We enter 2015 in good shape."
Stock trading revenue rose 1.3% to $911m and litigation expenses fell sharply from $2.3bn to $393m.
The lender’s mortgages division performed better with residential mortgage loan originations of $11.6bn versus $11.7bn in the previous three months. The consumer real estate arm reported a loss of $397m, having lost $1.04bn in 2013 and $5.18bn in the third quarter.