Bank of America is the latest big bank to report a steep decline in profits.
But just like many of its peers, the results weren’t as bad as Wall Street had been fearing.
Bank of America benefited from the improving economy, a pickup in mergers and acquisitions activity and surprising growth in its global markets business.
“The economy continues to strengthen, and our customers and clients are doing more business with us,” BofA CEO Brian Moynihan said in a statement.
Earlier this week Goldman Sachs and JPMorgan Chase reported stronger-than-expected results.
Overall, BofA posted net income of $2.3 billion, down sharply from $4 billion amid higher litigation costs.
That included a hefty litigation charge of $4 billion, or about 22 cents per share. Excluding those charges, BofA would have exceeded Wall Street forecasts.
BofA announced a $650 million settlement with American International Group (AIG) to resolve residential mortgage-backed securities claims.
In a sign of the improving economy, BofA’s consumer and business banking profits rose to $1.8 billion from $1.4 billion. The company benefited from lower credit losses as well as higher deposit and brokerage balances.
BofA’s global banking revenue rose thanks to more investment banking fees from all the mergers and initial public offerings.
“Among other positive indicators, consumers are spending more, brokerage assets are up by double digits and our corporate clients are increasingly turning to us to help finance business expansion and merger activity,” Moynihan said.
While foreign exchange and commodities trading suffered declines, the bank pointed to improved performance in mortgages and municipal products. Not surprisingly, equity sales and trading revenue tumbled 14% due to much lower volatility in the stock market in recent months.
