Bank of America beat Wall Street Q1 2014 earnings estimates with earnings per share of $US0.35 and revenue of $US22.8 billion.
However, the bank also reported a net revenue loss of $US276 million ($0.05 per diluted share) and took a $US6 billion litigation expense hit (before tax) which will cost shareholders $US0.40 per share after tax.
In other words, this is a pretty noisy report here.
Analysts expected earnings per share of $US0.30 and revenue of $US22.1 billion according to data compiled by Bloomberg Businessweek.
“The cost of resolving more of our mortgage issues hurt our earnings this quarter,” said Chief Executive Officer Brian Moynihan. “But the earnings power of our business and customer strategy generated solid results and we continued to return excess capital to our shareholders.”
Last quarter the company beat earnings estimates despite a dismal mortgage market. That miserable market continues, and has impacted the earnings we’ve already seen this quarter — JPM and Citi — but both banks still pulled it out for a beat.
Bank of America took a 66% hit to its mortgage business from this time last year, but couldn’t beat estimates like its peers thanks to this $US6 billion litigation expense.
Core operating expenses have continued their downward trend thanks to the bank’s ‘New BAC’ cost cutting program. Non-litigation interest expenses are down 6% from this time last year.
The bank’s wealth management business, which the bank made it a point to expand, also continued to grow its net income to $US729 million from $US721 million last year.
Another thing to note here is that Bank of America’s sales and trading in equities remained relatively flat. In fixed income, the bank suffered a 15% decline from th iss time last year.
Right now, however, that might as well be a beat considering that JPM and Citi both got killed in those sectors.
Goldman Sachs and Morgan Stanley report their earnings on Thursday morning.