BofA tops expectations on better credit quality

Bank of America Corp posted a better-than-expected first-quarter profit yesterday, as the second-largest US bank saw credit quality improve and capital markets activity rebound after slowing at the end of 2011.BofA said its provision for credit losses declined to the lowest level since the third quarter of 2007 and sales and trading revenue, excluding an accounting charge, was the highest since the 2008 acquisition of Merrill Lynch.BofA’s first-quarter net income was $653mn, or 3¢ a share, down from $2.05bn, or 17¢ per share, a year earlier. Revenue declined to $22.3bn from $26.9bn.The bank reported charges of $4.8bn related to changes in the value of its debt, partially offset by gains of $3.4bn from equity investments and debt-related transactions.Excluding debt valuation adjustments, it earned 31¢ a share.The Charlotte, North Carolina-based bank took a loan-loss provision of $2.4bn, compared with $3.8bn a year ago.In its capital markets operations, BofA reported sales and trading revenue of $3.8bn, up from $1.5bn in the fourth quarter, but down from $4.6bn a year ago.

Morgan StanleyMorgan Stanley’s first-quarter results beat expectations, as trading revenue rose sharply and the bank’s wealth management business began to improve, sending its shares up in premarket trading yesterday.Wall Street banks have had a good first quarter as capital markets activity returned after a dismal 2011. In the past few days, rivals Goldman Sachs Group, Citigroup and JP Morgan Chase have all said they have benefited from the rebound in capital markets.But Morgan Stanley’s rebound surpassed these rivals, posting higher trading revenue even over the first quarter of last year — a benchmark by which others have fallen short.The Wall Street investment bank reported a loss of $119mn, or 6¢ per share, compared with a profit of $736mn, or 50¢ per share, in the year-ago quarter.Excluding the special accounting item, known as debt valuation adjustment (DVA) — which requires companies to reflect changes to their own debt values, leading to charges when values rise and gains when values decline — Morgan Stanley earned $1.4bn, or 71¢ per share.Net revenue totaled $6.9bn. Excluding DVA, revenue was $8.9bn, up from $7.8bn a year earlier.

NokiaThe world leader in the manufacture of mobile phones, Nokia of Finland, reported a quarterly net loss which was far worse than expected on Thursday and reshuffled its global team. Nokia had issued a profit warning last week, but the net loss of €929mn ($1.2bn) in the first quarter of the year was far beyond the loss of €554mn broadly expected by analysts polled by Dow Jones Newswires. Sales fell by 30% on a 12-month comparison to €7.354bn, and this figure was in line with analysts’ expectations. Nokia posted an operating loss of €1.34bn over the period, almost double the loss of €731mn expected by analysts and said smartphone sales fell by 42% in the quarter. On Monday, the international ratings agency Moody’s downgraded its ratings for Nokia owing to poor prospects for future sales. The agency also maintained a a negative outlook on senior debt owed by Nokia.