Financial services giant Bank of America Corp. (BAC) Thursday reported a profit for the fourth quarter, benefiting from asset sales as well as lower provisions for bad loans, amid a challenging trading environment. Revenue for the quarter increased and came in ahead of Wall Street estimate.
Net income applicable to common shareholders was $1.584 billion or $0.15 per share, compared to a loss of $1.565 billion or $0.16 per share last year.
The latest quarterly results included several items such as a $2.9 billion gain on sale of China Construction Bank shares, two gains of $1.2 billion each related to exchange of trust preferred securities and sales of debt securities. BofA also recorded a Representations and warranties provision of $0.3 billion and Debit Valuation Adjustments, or DVA, on trading liabilities of $0.5 billion as well as a litigation expense of $1.5 billion, among others.
On average, 16 analysts polled by Thomson Reuters expected earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue, net of interest expense, increased to $24.89 billion from last year's $22.398 billion. Revenue, net of interest expense, on a fully taxable-equivalent, or FTE, basis rose 11 percent to $25.1 billion. Wall Street expected revenues of $24.08 billion for the quarter.
Provision for credit losses slumped to $2.934 billion from $5.129 billion in the previous year. Tier 1 common equity ratio increased 121 basis points sequentially to 9.86 percent.
Segment-wise, revenue declined 24 percent in the Cards Services business to $4.1 billion, driven by a decrease in net interest income from lower average loans and yields. During the quarter, new U.S. credit card accounts climbed 53 percent from last year.
Global Wealth and Investment Management net income decreased 22 percent to $249 million. Revenue was flat with last year at $4.2 billion.
Global Banking and Markets reported a net loss of $433 million, compared to net income of $669 million last year. Revenue declined 31 percent to $3.7 billion. Within this segment, sales and trading revenue decreased 44 percent to $1.4 billion. Fixed Income, Currency and Commodities sales and trading revenue, excluding DVA losses, decreased $416 million to $1.2 billion, due to a challenging trading environment.
Consumer Real Estate Services reported a net loss of $1.5 billion, narrower than the $4.9 billion loss in the prior year. Revenue increased to $3.3 billion from $480 million, primarily due to a $3.9 billion decrease in representations and warranties provision and a $908 million increase in MSR results.
Revenue at Global Commercial Banking slipped 2 percent to $2.6 billion, while net income was flat at $1.0 billion.
Revenue from the Deposits business slightly improved in the quarter, reflecting higher non-interest income. The business reported a profit, largely due to lower non-interest expense and higher revenue.
BofA's Chief Executive Officer Brian Moynihan said, "We enter 2012 stronger and more efficient after two years of simplifying and streamlining our company...we saw solid business activity by companies of all sizes, with commercial and industrial loan balances rising 13 percent from the fourth quarter of 2010, and small business loan originations increasing approximately 20 percent in calendar year 2011."
For the full year, net income applicable to common shareholders was $85 million or $0.01 per share, compared to a loss of $3.595 billion or $0.37 per share last year. Total revenue, net of interest expense, slipped to $93.45 billion from $110.22 billion in the previous year. Wall Street expected breakeven per share on revenues of $94.54 billion.
BAC, which settled at $6.80 on Wednesday, is adding 5.7 percent in pre-market trading.
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