Bank of America, the second-largest U.S. bank, said fourth-quarter profit fell 11% as revenue from fixed-income trading declined.
Net income slipped to $3.05 billion, or 25 cents a share, from $3.44 billion, or 29 cents, a year earlier, the Charlotte, North Carolina-based company said Thursday. Excluding the impact of accounting adjustments and other one-time items, profit was 32 cents a share, compared with the 31-cent average estimate of 27 analysts surveyed by Bloomberg.
Chief Executive Officer Brian T. Moynihan, 55, said last month that declines in trading revenue and low interest rates hurt fourth-quarter results. It was the lender's second profitable quarter of the year as costs from mortgage disputes and investigations into foreign-exchange manipulation weighed on results.
"Trading wasn't great in the quarter," said Mike Mattioli, an analyst at John Hancock Asset Management in Boston. "Everybody thinks volatility helps trading, but in the short term, banks were out of position."
Wall Street firms including JPMorgan Chase and Citigroup had warned investors that fourth-quarter trading revenue fell amid sharply higher market volatility. While most of the year was marked by low client activity because of unusually calm markets, heightened volatility also makes for a difficult trading environment, Citigroup CEO Michael Corbat said on Dec. 9.
Bank of America declined 2.2% to $15.68 at 7:24 a.m. in New York. The shares rose 15% last year, beating the 13% advance for the 85-company Standard & Poor's 500 Financials Index.
Revenue slipped 8.6% to $20.2 billion in the quarter from a year earlier, excluding the impact of accounting charges. The average estimate of 20 analysts surveyed by Bloomberg was $21 billion.
Revenue from fixed-income trading in the division run by Chief Operating Officer Thomas K. Montag fell 21% to $1.5 billion on weakness in credit and mortgage trading. That helped fuel a $400 million decline to $2.4 billion in the division's trading revenue, excluding the impact of accounting charges and recoveries on legacy positions a year earlier. Fixed-income trading revenue fell short of estimates of $1.83 billion from UBS Group AG's Brennan Hawken and $1.73 billion from Wells Fargo & Co.'s Matt Burnell.
In November, Bank of America lowered its third-quarter earnings by $400 million as talks tied to foreign-exchange probes progressed with the Federal Reserve and U.S. Comptroller of the Currency. Later that month, the company agreed to pay $250 million in fines to the OCC.
Legal costs tied to defective mortgages are largely behind the firm, Moynihan said in October. The company has agreed to more than $70 billion in settlements to resolve disputes after the financial crisis, mostly from the 2008 acquisition of subprime lender Countrywide Financial Corp.
Moynihan became Bank of America's chairman in October, succeeding Charles "Chad" Holliday, 66, and uniting the roles for the first time since 2009, when then-CEO Kenneth D. Lewis was stripped of his chairmanship.
JPMorgan said Wednesday that quarterly profit fell 6.6 % to $4.93 billion as fixed-income trading revenue declined. Wells Fargo said net income climbed 1.8 % to $5.71 billion on improved lending. Citigroup, the third-largest U.S. lender, is also scheduled to report results today.