BofA posts its best profit in six years

Bloomberg

Brian Moynihan’s efforts to boost Bank of America Corp. profit through cost cutting finally got some help from interest rates. The lender posted the highest net income in six years as the chief executive officer cut expenses more than forecast and net interest income rose to the highest since 2011.
During his seven years as CEO, Moynihan has worked to reduce legal costs that dogged the firm after it acquired Merrill Lynch & Co. and troubled mortgage lender Countrywide Financial Inc. The lender has spent $70 billion on legal bills since the financial crisis — more than any other US bank — including $30 billion on mortgage putbacks.
Total revenue rose less than 1 percent to $21.8 billion, slightly below analysts’ expectations, weighed down by a decline in mortgage-banking fees. Expenses dropped 2.5 percent to $13.1 billion, the bank said in a statement, compared with estimates of $13.3 billion.
Revenue from trading stocks and bonds declined 15 percent from a year earlier to $3.15 billion — in line with what the lender predicted last month. Fixed-income contributed the most to the slump, falling 22 percent to $2.17 billion. Equities trading, which is about half the size of fixed income, rose 2.5 percent to $984 million.
Trading of fixed-income emerging-markets products was down in the quarter and there was less activity in Asia compared with last year, Donofrio said on the call.
Net income increased 13 percent to $5.59 billion, or 48 cents a share, from $4.95 billion, or 41 cents, a year earlier, according to the statement. The average estimate of 26 analysts surveyed by Bloomberg was for per-share profit of 46 cents.
Bank of America posted $11.4 billion in net interest income, using the adjusted figure analysts tend to prefer to show fully taxable equivalence. That topped estimates of $11.35 billion.
The second-largest US lender said it wrote off $900 million in soured loans during the quarter, or 1.4% more than a year earlier. The bulk of the bank’s bad loans are tied to U.S. credit-card users, according to the statement. Provisions for credit losses increased 15% from the previous quarter to $834 million.
Those results echo reserve building that JPMorgan Chase & Co. and Citigroup Inc. undertook during the quarter. Those banks boosted their reserves for consumer-loan losses by the most in more than four years.
Investment-banking fees rose 1.3% to $1.48 billion
from a year earlier, fueled by
increases in revenue from
advising companies.