Bank of America Cost Cuts Prompt 63% Profit Gain

Your next video will start in

Recommended Videos

  • Info

  • Comments


July 17 (Bloomberg) -- Bloomberg's Scarlet Fu and Market makers anchor Erik Schatzker dig deeper into Bank of America's second-quarter results as profit climbed 63 percent on lowered company expenses. She speaks on Bloomberg Television's "In The Loop."

The nation's -- nation's second-biggest bank having an earnings per share of 32 cents.

Consensus was 26 cents.

Net interest margin, the amount of money bank of america makes on loans, 2.44%. higher than estimated and an improvement from the first quarter.

Bank of america set aside less money for potential bad loans, which underscores the improved credit quality trend we have been seeing.

1.2 billion provision that is less than estimated.

500 million that the less rigid first quarter.

I was looking at the capital markets business, investment banking fees at $1.6 billion come in line to slightly higher.

In trading, fixed-income currencies and commodities, $2.3 billion.

Down 23% from the first quarter.

Meanwhile, the other big banks posted double-digit gains.

Bank of america did say conditions becoming more challenging toward the end of the quarter as a long-term rates increased.

Equities traded at $1.2 billion, up 50% from last year.

We were talking with robert albertson, chief strategist at sandler o'neill.

He says for bank of america and will be another one-two years in the mud because of litigation issues, like is the issues continue to overhang the bank.

Not as dramatic as it were in the past.

Bank of america setting aside 471 million for litigation expenses.

It makes a distinctive from the other lenders.

What investors are looking for is a return to earnings power.

But they say that net interest income will be building over time out from the second quarter's $10.4 billion.

In other words, waiting for the economy to return to normal.

The first sign is the federal reserve backing off of the stimulus purchases of bonds, and perhaps create interest rates up as well.

A big factor for the banks.

The good things you for going through the numbers.

Erik schatzker going to those numbers.

-- banking for going through the numbers.

Takeout-- thank you for going through the numbers.

There are some things that brian moynihan does have control over, namely cost.

No bank in america is cutting costs as fast as bank of america.

I want to show you a chart.

Between the second quarter of last year and second quarters this year, bank of america cut a billion dollars in expenses.

The only other bank to cut costs over that time.

Wells fargo, citigroup and j.p. morgan actually added expenses over that time.

How did brian moynihan do it?

Brian moynihan cut 18,000 jobs over the past year and was also able to cut the legacy mortgage expenses much faster than bank of america thought.

We have been talking about it as a mortgage problem bank for so long now.

Brian moynihan has been working on a four few years and appears to be making great progress.

Now, let's forget that chart.

That explains why he is so focused on cutting costs.

They are nowhere near the efficiency ratio.

Non-interest expenses.

Below were, the better.

Amazingly, citigroup and other cost-cutting story has made it pretty close to wells fargo.

Brian moynihan still has a ways to go.

Everyone upset with the bank of america, the mortgage story, but there is certainly more than that.

There certainly is.

Sealed and investment trading still a very big part of this.

-- sales and investment trading still a very big part of the bank.

Investment banking fees are pretty solid.

If you take a look, you can see that if you add investment banking revenue and trading revenue, bank of america has the lowest among the top four in the business.

The real story is bank of america is falling further behind.

This has some catching up to do what bank of america is doing great on cost-cutting come improving mortgages.

The merrill lynch franchise appears to be deteriorating, at least as measured by revenue.

The cure for the deep analysis.

This text has been automatically generated. It may not be 100% accurate.


BTV Channel Finder


ZIP is required for U.S. locations

Bloomberg Television in   change