Bank of America, the second-biggest U.S. lender by assets, said profit declined 13% on a drop in trading and underwriting revenue and a 30% increase in provisions for credit losses, mostly tied to souring energy loans.
First-quarter net income fell to $2.68 billion, or 21 cents a share, from $3.1 billion, or 25 cents, a year earlier, according to a statement Thursday from the Charlotte, N.C.-based firm. Adjusted earnings per share were 20 cents, missing the 21-cent average estimate of analysts surveyed by Bloomberg.
Chief Executive Brian Moynihan, 56, spent the first half-decade of his tenure wrestling with legal costs tied to his predecessor’s acquisitions of Countrywide Financial and Merrill Lynch. His attempt to push revenue higher is bumping up against volatile markets, low interest rates and rising costs from soured energy loans. The stock declined 18% this year through Wednesday, the worst performance on the 24-company KBW Bank Index.
Revenue fell 6.7% to $19.5 billion, missing the $20.3 billion estimate of Wells Fargo analyst Matthew Burnell. Expenses declined 6.4% to $14.8 billion, below Burnell’s $15.1 billion prediction.
Bank of America shares climbed 5 cents to $13.84 at 6:56 a.m. in New York.
Profit from the global-markets division, the trading operations overseen by Chief Operating Officer Thomas Montag, fell 4% to $889 million, excluding the impact of accounting adjustments tied to debt valuations. Adjusted revenue from trading fell 16% to $3.3 billion, driven by declines in bond and stock trading. That matched the $3.29 billion average of seven analysts surveyed by Bloomberg. Fixed-income revenue fell 17% on a tough environment for credit trading and lower currencies revenue, and equities trading declined 11%.
The firm’s global-banking division reported a 22% profit decline to $1.07 billion, on a similar drop in investment-banking fees. That compares with analysts’ $1.3 billion estimate.
Consumer-banking profit climbed 22% to $1.8 billion as expenses fell. Profit at the wealth-management division, which includes the Merrill Lynch brokerage, rose 13% to $740 million as lower expenses more than offset a decline in revenue.
JPMorgan Chase, the biggest U.S. lender, posted first-quarter profit on Wednesday that beat Wall Street estimates as the firm slashed bankers’ pay and reported a decline in trading revenue that was less than most analysts predicted. Wells Fargo is scheduled to report results Thursday.
Bank of America, JPMorgan and Wells Fargo were among the U.S. banks that learned Wednesday they failed a key regulatory requirement aimed at avoiding another financial crisis: proving they could go bankrupt without disrupting the financial system. The lenders will have until Oct. 1 to rewrite their plans, with the added incentive that another failure would give the Federal Reserve and the Federal Deposit Insurance Corp. power to subject them to more capital or liquidity constraints.