real-time news and commentary for investors
Wednesday, Oct 16
BofA management: Improving credit trends about to flatten out
- Bank of America (BAC) repurchased 60M shares in Q3, bringing repurchases YTD to 140M shares, or $1.9B (vs. the $5B authorized by the Fed through 2014 Q1), says CEO Moynihan on the earnings call now playing live on Seeking Alpha (presentation slides).
- Net interest income excluding market-related impacts hasn't really budged from about $10.5B during any quarter over the last year. The bank continues to be "asset sensitive" and thus poised for NII to move higher along with interest rates. Excluding market-related impact, net interest yield rose to 2.44% from 2.36% last quarter.
- While expenses fell $1.1B from last year, they ticked $400M higher in Q2 as the bank - glancing at neighbor JPMorgan - boosted litigation reserves by $500M. Full-time-equivalent employees fell to 247.9K from 272.6K.
- The tailwind from improving credit is about the stop: Net charge-offs - which fell to $1.7B in Q3 from $2.1B in Q2 and $4.1B a year ago - are expected to fall again in Q4 before stabilizing in 2014 to a run rate of about $1.5B per quarter, says CFO Bruce Thompson.
- As expected, FICC revenue fell a sharp 20%, or $501M to $2B in Q3, but market share gains and improved volume had equity revenue 36% higher, or $255M to $1B.
- Higher earlier, shares are now flat premarket.
- Q&A session is set to begin shortly.