Chillin' out till it needs to be funded
BofA took off in income and profits after repaying TARP cash (TAGP if you will) in the 4th Quarter, studying JPMorgan’s Balance Sheet to report and almost identical $3.2 billion profit on $32 billion in revenue. Spurred by a jump in Trading income by over $4 billion to $5.2 billion, it listed itself in the right spot behind JP Morgan in the Dealogic Investment Banking Tables with $8 billion in Global Investment Banking Income. Of course a lot more analysis will follow after the Earnings Conference in a couple of hours, but it seems that America’s favorite depends on more than its home loans and Card accounts to get by in 2010.
Estimating CARD impact in lower revenues(balances carried forward) and lower fees and charges , the bank expects a loss of $1 billion in 2010 from the Act provisions thru the “inability to reprice risk” and reduced balances. Card volumes fell by 7% to $105 bn Q-o-Q but the bank was on top of Charge offs improving its position by $2.6 bn
Also FAS166/167 brought a lot of its card receivables back on the books even though total credit loss provisions jumped to $13 billion. Commercial Loans also declined $13 bn. At managed basis however, the assets are still $322 billion. Interest Yield overall across the bank was a healthy 2.93% on the 13 bn in Interest Income
Wealth and Investment Management trailed behind Investment Banking ($7 billion) and Cards ( $6.8 bn) with $4 billion in Income. Sales and Trading led in the speculative high yield and leveraged loans segment again pandering to short term investors. It was also #1 in Global IPOs with $1.5 bn from Equity fees. In earlier quarters, it had carried $3 bn in gains from Blackrock and its sale of China Construction Bank’s 9% out of the 17% it held.
The bank intends to talk about the improving environment for credit but has little to show for it with Integration of Merrill Lynch limited to 160000 odd references for commercial banking from its Wealth clients.
Credit loss provisions of $3.6 billion on its $240 billion Home loan book seem much more manageable , even though not much more is expected from Fixed Income Sales and Trading in the rest of the year and Non Interest income is still $5 bn below its performance y-o-y in 2009
Mortgages did a poor $870 million in new business and over $600 million in Servicing. Investment and Brokerage revenues remained flat at $1.5 bn each and Retail Deposits also remained flat. Institutional deposits fell by $10bn. The bank is looking more amnd more like a JPM Chase follower than an American leader..
Bank results week