Newspaper article International Herald Tribune

Earnings at Bank of America and Morgan Stanley Beat Estimates

Newspaper article International Herald Tribune

Earnings at Bank of America and Morgan Stanley Beat Estimates

Article excerpt

Bank of America's operating profit was better than expected, while Morgan Stanley's adjusted earnings also exceeded forecasts.

Despite a drop in revenue and one-time accounting charges, Bank of America on Thursday reported a better-than-expected operating profit for the first quarter, as lower credit losses among consumers and strength on Wall Street offset continuing weakness in its mortgage business.

Morgan Stanley also reported adjusted earnings that beat analyst estimates, driven by stronger-than-expected trading revenue. Including charges, however, the firm had a loss of $94 million, or 6 cents a share, in the first quarter. That compared with a profit of $968 million a year earlier.

Bank of America's decline in revenue contrasted with the results at other big banks, including JPMorgan Chase and Wells Fargo, which reported increases in revenue and profit. It also underscores a retrenchment that pushed Bank of America out of the top spot among the biggest banks in the United States.

Because of one-time expenses related to how its debt is valued, Bank of America's net income fell to $653 million, or 3 cents a share, from $2 billion, or 17 cents a share a year earlier, while its revenue fell 20 percent, to $22.5 billion. Excluding those charges, the company's revenue was down 2.5 percent, to $27.3 billion, while its profit was up 34.8 percent, to $310 million.

The results were affected by accounting charges related to the firm's credit spreads. Excluding those one-time items, the firm had a profit of 71 cents a share. That handily beat the 44 cents a share estimates of analysts polled by Thomson Reuters.

The bank's operating income was 31 cents a share and was ahead of analyst estimates of 12 cents a share. Its revenue met expectations.

The company's global markets unit posted a profit of $798 million, compared with a loss of $768 million in the fourth quarter. Revenue at the division, which includes Bank of America Merrill Lynch, more than doubled from the fourth quarter but was down from the first quarter a year earlier.

One bright spot both for the bank and the broader economy were signs that consumers are doing better. …

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