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Bank Results Season: Bank of America with more provisions for 2011 | Insider Insight

Bank of America Merrill Lynch

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The bank has published results with new reserves of $15.6 bln on representation and warranties, $6.3 bln in litigation and another $7.3 bln in Legacy Assets servicing bringing Net Revenues down by $29.2 bln, more than Goldman Sachs produced for the entire year.

The Q4 results hit a topline of $25 bln as expected and added a phenomenal $2 bln to the bottomline , just enough to publish a $85 mln profit for the year afte paying $1.4 bln in preferred dividends from a2011 net income of $1.45 bln for 2011.

The $25.1 bln Q4 topline includes $2.9 bln from CCB and $1.2 bln each from exchange of trust preferred and sale of debt securities, apart from negative adjustments of $3.9 bln from the Warranties legal and other mortgage servicing provisions and CVA (negative DVA)

Net Interest income for the year is down 14% to $44 bln and Non interest income is down 18% to $48.8 bln. After provisions , the topline for the year is $76.9 bln. Non interest charges removing all special charges and provisions is still higher by more than 11% at $76.45 bln

Tangible BVPS is $12.95 same as latest year and Book value at $20.09 over 10.352 bln common shares. The bank has imporved its Tier I common to 9.86% after asset sales(Capital actons) , and staff count is lesser by 3,837 people over 2010 and lesser by 5,874 from September 30 at 285k people

No of banks and ATMs is relatively inchanged from September,  down by 154 and 170 for the year. The bank intends to expand in catchment areas like Florida in retail and consumer banking

Cross selling from consumer wealth businesses is up 39%, average deposits up 5% or $45 bln and Mobile Banking grew from less than 6MM customers to 9 MM customers.

4Q grew corporate loans and leases by 29% and the full year Credit book grew by $557 bln but interest yields dropped to 2.48% for a $10 bln down tick in NII, with the interest expense of $23 bln , coming more than 50% from long term debt to $11.8 bln Yielda hti abottom of 2.32% last quarter.

Long Term Debt is $372 bln (down 17% on year) and Fed debt $215 bln while more than $892 bln in Loans and Leases is held in assets.  Total Deposits ended the year at $1.033 Tln

Card Income for the year was $7.18 bln, Investment and Broerage services $11.8 bln and a good $14 bln from Equity investments and trading accounts income. For the quarter Card Services made a profit of $1.02 bln with Durb. in counted as a $430 mln impact in the last quarter New US Card accounts are up 53% over last year. Net Card losses improved for the 9th quarter to under 6%

Depsits income, Cards and Wealth were a topline of $3 bln, $4 bln and $4 bln for the quarter but expenses in Deposits and Wealth increased on FDIC expenses

Commercial Banking was the only reasonable business in Q4 with $2.5 bln in revenues and $1.04 bln in profits same as last quarter

Investment Banking rivalled Top tier banks and redeemed its Top3 ranking with a $5.22 bln income (#2 in Fee income)

Global Banking and Markets (Sales and Trading plus investment Banking) revenues remained low key at $3.7 2 bln with Sales and Trading booking a CVA charge of $2.2 bln for a $400 mln loss on the business despite $2 bln in Non interest income incl $1.04 bln in IB income. Excl CVA, the GBM Fixed Income component grew from a low $300 MM in 3Q to $1.2 bln in Q4 with a smaller $900mln from Equities Sales and trading 4Q Personnel expenses grew down to $8.7 bln driven by the 7000 decrease in headcount but were compensated by severance and the default servicing costs in mortgages

Personnel expenses in this statement cast a $37 bln hit an average of $129,868 per person. The bank will be firther growing its team of Small business bankers and Financial advisers in 2012 after a 300 and 1.700 growth in 2011




Pre release: After reporting a 90 cent loss in june 2011, BofA is not expected to repeat its comeback of September 2011 for a $6 bln profit as the bankstruggles with legal settlements and more than $30 bln losses updated last week by analysts int he remaining mortgages portfolio.

It has familialised the integrated organisation structure for the combined BofA Merrill Lynch company with changes at the top, Sally krawcheck leaving the fight for top position and ML Asia pacific losing 15 MDs last week after a long merger integration battle. Project new BAC continues with $1,.5 bln in savings every quarter and it is expected that the bank still has a $30 bln capital hole despite asset sales of over $50 bln in the last 2-3 years. its countrywide legacy still costing the bank its heritage.

The habitual EPS deratings in the last month/week have left Q4 results expectation at 13 cents per share of $1.3 bln

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