Bank Of America Reports Horrible Quarter For Trading And Banking

bank of america

Photo: AP

Bank of America’s earnings report is out.This number stands out right away:

Fixed Income, Currency and Commodities sales and trading revenues excluding DVA gains were $314 million, a decrease of $3.2 billion compared to the same quarter last year, due to lower client activity and adverse market conditions. Equities sales and trading revenues excluding DVA gains were $757 million, a decrease of $201 million primarily driven by lower trading revenue in equity derivatives.

And this number looks pretty awful:

Global Banking and Markets reported a net loss of $302 million, down from net income of $1.5 billion in the year-ago quarter. Pretax income was $727 million, down from $2.9 billion a year ago. Revenue declined 26 per cent to $5.2 billion, primarily driven by lower sales and trading revenue and investment banking fees. Tax expense for the most recent period included a $774 million charge related to the U.K. tax rate change enacted during the quarter, which reduced the carrying value of the deferred tax assets.

The overall number is pretty opaque.

Here’s the overall description of the revenue:

Bank of America Corporation today reported net income of $6.2 billion, or $0.56 per diluted share, for the third quarter of 2011, compared with a net loss of $7.3 billion, or $0.77 per diluted share, in the year-ago period. Revenue, net of interest expense, on a fully taxable-equivalent (FTE) basis1rose 6 per cent to $28.7 billion.

There were a number of significant items that affected results in both periods. The most recent quarter included, among other things, $4.5 billion (pretax) in positive fair value adjustments on structured liabilities, a pretax gain of $3.6 billion from the sale of shares of China Construction Bank (CCB), $1.7 billion pretax gain in trading Debit Valuation Adjustments (DVA), and a pretax loss of $2.2 billion 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 billion goodwill impairment charge. Details on the significant items are included in the revenue and expense section of this press release.

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