Bank Of America Misses Revenues As FICC Disappoints, EPS Beats On Accelerated Expense Reductions

With much hope placed on bank results, even if yesterday’s Morgan Stanley announcement of a cut in IB bonuses hinted not all may be well, moments ago Bank of America said Q4 profit rose 43% as revenue rose less than expected, however offset by rising cost-cuts. Q4 EPS of $0.40, beat expectations of $0.38 despite missing on the top line, reporting revenues of $20.22bn, below consensus of $20.89bn, as trading revenues missed dragged lower by FICC revenue of $1.96bn which missed estimates of $2.12bn. In an attempt to redirect attention from the mixed earnings, the bank also announced it would boost its buyback by $2.5BN from $1.8BN to $4.3BN.
Net interest income rose 6.3% to $10.3 billion, falling short of the $10.6 billion average estimate. Net interest margin was unchanged from three months earlier at 2.23 percent. Investment-banking revenue, which includes dealmaking and underwriting securities in the business run by Christian Meissner, slid 3.9 percent to $1.22 billion, the company said. Last month, Moynihan said he expected those activities would generate $1 billion to $1.2 billion in the fourth quarter. Mortgage revenue almost doubled to $519 million from a year earlier, the bank said. Barclays Plc’s Jason Goldberg had expected the bank to generate $252 million from mortgage banking as fewer consumers take out residential loans, while Macquarie Group Ltd.’s David Konrad estimated $218 million.
While FICC revenue climbed 12% to $1.96 billion, it was short of consensus estimates of $2.1 billion. Equity trading rose 11 percent to $948 million, in line with their predictions. Total revenue rose 2.1% to $20 billion, missing estimates of $20.8 billion. Expenses fell 6% , more than expected, to $13.2 billion as compensation costs dropped 2.6% .

This post was published at Zero Hedge on Jan 13, 2017.