Bank of America Corp Posts Better-Than-Expected Loss

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Bank of America Corp (NYSE:BAC) released its latest earnings report before opening bell this morning, posting losses of 1 cent per share on $21.4 billion in revenue. Analysts had been expecting losses of 9 cents per share on $21.33 billion in revenue.

The bank’s third quarter losses stem from the recent settlement with the Department of Justice. The settlement was $5.3 billion pretax or 43 cents per share after tax. Net income for the quarter was $169 million.

Breaking down Bank of America’s earnings report

Bank of America reported year over year increases in net income in four of its five businesses. During the quarter, the bank originated $14.9 billion in residential and home equity loans and issued more than 1.2 million new credit cards. Of those credit cards, 64% of them went to customers with whom the bank has an existing relationship.

The bank posted record revenue and earnings for its global wealth and investment management division and saw a 4% increase in firm-wide investment banking fees, which were $1.4 billion in the quarter. Sales and trading revenue excluding net DVA, rose 9% year over year, while noninterest expenses, excluding litigation, fell $1.1 billion to $14.2 billion.

Bank of America also reported continued improvements in credit quality, as net charge-offs fell 38% year over year to $1 billion. The net charge-off ratio is now .46%, which is the lowest the bank has seen in ten years.

Bank of America sees strong capital and liquidity

During the third quarter, the bank reported a standardized Basel III common equity Tier 1 ratio of 9.6%. The advanced Basel III ratio is approaching 9.6%. Bank of America reported that supplementary leverage ratios are higher than the 2018 required minimum, with the parent company at around 5.5% and the primary bank at around 6.8%.

Tangible book value per share rose 4% year over year to $14.13 per share.

Bank of America by segment

The bank reported net income of $1.9 billion from its Consumer and Business Banking segment. Average deposit balances rose 4% year over year, while client brokerage assets climbed 21%.

Bank of America’s Global Wealth and Investment Management division reported $813 million in net income, a new record. Client balances rose 8% year over year, while asset management fees set a new record of $2 billion.

The Global Banking segment recorded net income of $1.4 billion, a 24% year over year increase. Investment banking fees climbed 4% year over year, and average loan and lease balances increased 3%.

Bank of America’s Global Markets segment saw $769 million in net income, while the Other segment saw $500 million in net income for the third quarter.

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