Bank of America Merrill Lynch crushes with record quarterly earnings as trading takes smaller hit than peers

Bank of America Merrill Lynch announced fourth-quarter earnings results Wednesday, handily beating expectations with $US0.70 a share in adjusted earnings and record net earnings of $US7.3 billion.

Analysts had projected the bank to report adjust earnings of $US0.63 a share.

Fixed-income trading revenue fell 15%, a smaller loss than its peers Citigroup and JPMorgan Chase reported earlier this week.

Here are the highlights:

  • Revenue: $US22.7 billion, beating expectations of $US22.4 billion.
  • Net income: A record $US7.3 billion, beating expectations of $US6.3 billion and up 39% from last year.
  • Consumer banking: Net income rose 52% to $US3.3 billion, while revenue increased 10% to $US9.9 billion.
  • Wealth management: Net income rose 43% to $US1.1 billion, while revenue increased 7% to $US5 billion.
  • Investment banking: Fees fell 5% to $US1.3 billion, driven by lower debt underwriting and advisory.
  • Trading: Overall revenue down 6% to $US2.5 billion. Fixed income dropped 15% to $US1.4 billion, while equities increased 11% to $US1.1 billion.

“I am proud of our teammates who produced record earnings for the quarter and the year by driving responsible growth,” CEO Brian Moynihan said in a statement. “Our teammates worked for our customers and delivered solid loan and deposit growth, and other activity, while managing risk well. Operating leverage based on disciplined expense management while investing in our future, solid asset quality, and loan and deposit growth drove this quarter’s results.”

Bank of America’s 6% drop in overall sales and trading revenue is modest compared with the losses reported at Citi and JPMorgan so far.

Citigroup on Monday reported a 21% drop in fixed-income trading and 14% drop in trading overall. JPMorgan Chase posted its worst bond-trading results since the financial crisis.

“Bad volatility” wreaked havoc on the markets in December, and bank trading results have taken a hit as clients sat it out on the sideline for much of the fourth quarter.

Goldman Sachs also reports earnings on Wednesday, and Morgan Stanley is due to report Thursday.

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