Bank of America sees revenue gain
Bank of America essentially matched expectations when it reported its fourth quarter earnings.
The troubled bank said it earned $2 billion, or 15 cents a share, compared with a loss of $1.2 billion a year ago. The fourth quarter results were pretty much in line with the estimates, which had been sharply reduced as the reporting date neared.
The real surprise was the top-line growth, as revenue soared to $25.1 billion for the quarter, up 11 percent year over year. The gains did not reflect a stunning surge in core businesses, however. In fact, revenues were weak in many key units. Revenues from the following business lines were essentially unchanged or down slightly: Deposits, card services, global wealth management and commercial banking. Revenue in consumer real estate surged, driven mainly by a $3.9 billion reversal in representations and warranties provisions and a $908 million increase in MSR results.
As with other banks, revenues plunged in the capital markets unit (mainly the Merrill Lynch unit), declining 31 percent. This reflects weakness in FICC and equities sales, trading and weakness in investment banking activity. The biggest contributor to the pop in overall bank revenue was a one-time $2.9 billion gain from the sale of shares in China Construction Bank. The bank also benefited from a $1.2 billion from gain associated with the exchange offer.
Bank of America continues to be successful in its quest for a “fortress balance sheet.” Bank of America’s Tier 1 capital ratio rose to 9.86 percent from 8.6 percent a year ago. It would appear to be on track to Basel III compliance.
- here’s the release