Financial services giant Bank of America Corp. (BAC: Quote) Wednesday reported a four-fold increase in first-quarter profit amid a 5 percent growth in revenue and lower loan loss provisions.
However, earnings were short of Wall Street estimates and adjusted revenues declined from last year.
BofA attributed the surge in profit to increased brokerage income, higher investment banking fees, and improved credit quality across all major portfolios. This was partially offset by lower mortgage banking income and lower net gains on the sales of debt securities.
Close competitor JPMorgan Chase & Co. (JPM: Quote) last week reported a 33 percent jump in first-quarter profit, reflecting strong growth in Corporate & Investment Banking business, as well as lower expenses and provision for credit losses. Total revenues declined and missed view.
BofA's net income surged to $2.62 billion or $0.20 per share from $653 million or $0.03 per share in the prior year. On average, 28 analysts polled by Thomson Reuters expected earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue, net of interest expense, advanced to $23.5 billion from $22.28 billion. Analysts expected revenues of $23.49 billion.
However, adjusted revenue fell 8.4 percent to $23.852 billion.
Provision for credit losses declined to $1.713 billion from $2.418 billion. Effective tax rate was 28 percent for the quarter compared to 9 percent last year.
Segment-wise, Consumer and Business Banking net income slid 4 percent to $1.382 billion, due to lower net interest income, partially offset by lower noninterest expense.
Consumer Real Estate Services or CRES reported a wider loss for the quarter, amid lower revenues and higher noninterest expense. BofA funded $25 billion in residential home loans and home equity loans during the quarter, up 56 percent from last year.
Global Wealth and Investment Management profit climbed 31 percent to $720 million and revenue increased 7 percent to $4.4 billion.
Global Banking's profit fell amid flat revenues.
As part of a plan to streamline operations, the company still expects total cost savings to reach $8.0 billion per year, or $2.0 billion per quarter, by mid-2015.
BAC closed at $12.28 on Tuesday. The stock is falling 1.1 percent in pre-market activity.
by RTT Staff Writer
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