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Last Update: 18-Oct-11 09:32 ET
Bank of America Tops Third Quarter Revenue Expectations
Bank of America (BAC $6.28 +0.25) reported third quarter earnings of $0.56 per share, including a number of items, may not be comparable to the Capital IQ Consensus Estimate of $0.22.
Revenues net of interest expense rose 6.4% year/year to $28.7 billion versus the $25.69 billion consensus.
The most recent quarter included, among other things, $4.5 bln (pretax) in positive fair value adjustments on structured liabilities, a pretax gain of $3.6 bln from the sale of shares of China Construction Bank (CCB), $1.7 bln pretax gain in trading Debit Valuation Adjustments (DVA), and a pretax loss of $2.2 bln related to private equity and strategic investments, excluding CCB. The fair value adjustment on structured liabilities reflects the widening of the company's credit spreads and does not impact regulatory capital ratios. The year-ago quarter included a $10.4 bln goodwill impairment charge.
Net interest income on an FTE basis decreased 16 percent from a year earlier. The net interest yield fell 40 bps YoY, driven by hedge ineffectiveness and the acceleration of amortization of premiums on securities due to faster prepayment expectations. Noninterest income increased $3.7 bln from the year-ago quarter largely due to higher other income and equity investment income, partially offset by lower trading account profits. This was partially offset by the losses in Global Principal Investments and a write-down of a strategic investment. Trading account profits were lower due to adverse market conditions throughout the quarter. Excluding the goodwill impairment charge of $1.4 bln, noninterest expense increased by $797 mln, reflecting increased personnel costs. Global Banking and Markets reported a net loss of $302 mln, down from net income of $1.5 bln in the year-ago quarter Sales and trading revenue was $2.8 bln, a decrease of 37% YoY. The current period includes DVA gains of $1.7 bln compared to losses of $34 mln in the third quarter of 2010, as the co's credit spreads widened throughout the quarter.
Credit quality improved YoY in the third quarter, with net charge-offs declining across most portfolios.
TBV $13.22, up from $12.65 QoQ, down from $12.91 YoY. Regulatory capital ratios increased significantly QoQ during the third quarter, with the Tier 1 capital ratio at 11.48%, the Tier 1 common equity ratio at 8.65%, and the Tangible common equity ratio at 6.25%.
Revenues net of interest expense rose 6.4% year/year to $28.7 billion versus the $25.69 billion consensus.
The most recent quarter included, among other things, $4.5 bln (pretax) in positive fair value adjustments on structured liabilities, a pretax gain of $3.6 bln from the sale of shares of China Construction Bank (CCB), $1.7 bln pretax gain in trading Debit Valuation Adjustments (DVA), and a pretax loss of $2.2 bln related to private equity and strategic investments, excluding CCB. The fair value adjustment on structured liabilities reflects the widening of the company's credit spreads and does not impact regulatory capital ratios. The year-ago quarter included a $10.4 bln goodwill impairment charge.
Net interest income on an FTE basis decreased 16 percent from a year earlier. The net interest yield fell 40 bps YoY, driven by hedge ineffectiveness and the acceleration of amortization of premiums on securities due to faster prepayment expectations. Noninterest income increased $3.7 bln from the year-ago quarter largely due to higher other income and equity investment income, partially offset by lower trading account profits. This was partially offset by the losses in Global Principal Investments and a write-down of a strategic investment. Trading account profits were lower due to adverse market conditions throughout the quarter. Excluding the goodwill impairment charge of $1.4 bln, noninterest expense increased by $797 mln, reflecting increased personnel costs. Global Banking and Markets reported a net loss of $302 mln, down from net income of $1.5 bln in the year-ago quarter Sales and trading revenue was $2.8 bln, a decrease of 37% YoY. The current period includes DVA gains of $1.7 bln compared to losses of $34 mln in the third quarter of 2010, as the co's credit spreads widened throughout the quarter.
Credit quality improved YoY in the third quarter, with net charge-offs declining across most portfolios.
TBV $13.22, up from $12.65 QoQ, down from $12.91 YoY. Regulatory capital ratios increased significantly QoQ during the third quarter, with the Tier 1 capital ratio at 11.48%, the Tier 1 common equity ratio at 8.65%, and the Tangible common equity ratio at 6.25%.
