The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Bank Earnings Season 2Q 2014: BofA? Do not write them off yet, they made $2 Bln

This time it was an additional $4 Bln in legal provisions at the bank, as it chose to add to its $60 Bln spent and unspent provisions since its purchase of Merrill Lynch and Countrywide. The LA Times, is still at $17 Bln on the late teleprinters so we assume the DOJ deal has not happened yet. Eric Holder is likely to settle them sooner than others expect as he remits office in September. Refinance is still happening int he market, but with no edge to the housing story, and despite US Bank and PNC Financial, the US mortgage markets are likely to end up below the $1 Tln mark, making it imperative for Holder to close on the banks to higher amounts of penalty

We have dropped Bank of America coverage per se at other loss making events repeated int he last 5 years, however as we maintained America’s Heritage bank cannot possibly be ignored. The bank accounts for the biggest tranches of penalised mortgages for which it is already putting aside $13 Bln in a 2012 settlement. This settlement therefore is likely to include higher penalties(Non taxable) and has barely managed pennies in savings in mortgage servicing, the latest round finally including 500 jobs at the mortgage servicing units which still payroll more than 20000 people

CalSTRs is voting against the bank this week after a due suspension of its dividend and capital plans. the bank has revised its Tier I capital down earlier last week.

Revenues in the quarter declined 4% to $22 Bln and the bank continues to gain from Project New BAC refinements. Non interest expenses included a 6% improvement in operating costs, but ratcheted up from $3.7 Bln in litigation expenses. The company now has 233000 FTE and the Fed rejection of its CCAR as expected tracked with lower revenues in Consumer Banking at $7.35 Bln on a managed basis, I mln new card customers and digital continuing to gain from multi banking users up in double digits keeping good pace with CHASE. CRES losses jumped again to $2.5 Bln including a settlement with AIG

 

 

 

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This entry was posted on July 20, 2014 by in Uncategorized.

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