CORPORATE RESULTS
BofA profit jumps as equities trading revenue improves
Bank of America Corp reported a stronger-than-expected 70% rise in second-quarter profit, helped by higher revenue from equities sales and trading and a drop in expenses.
Net income applicable to common shareholders rose to $3.57bn, or 32¢ per share, from $2.10bn, or 19¢ per share, a year earlier. Revenue, net of interest expense, rose 3.5% to $22.73bn.
Analysts on average had expected the second-biggest US bank by assets to earn 25¢ per share, according to Thomson Reuters I/B/E/S.
Bank of America shares were up 1% at $14.05 before the bell.
The bank’s operating expenses fell to $16.02bn from $17.05bn in the same quarter last year. Cost-cutting has been a priority for chief executive Brian Moynihan, who took charge in 2010.
Bank of America unveiled an initiative in 2011 that aims to save $8bn a year and has set a goal of achieving $1.5bn in savings per quarter by the fourth quarter of 2013.
Sales and trading revenue in the bank’s global markets division rose 11.2% to $4.15bn, excluding an accounting adjustment.
Revenue in the global banking division rose 6% to $4.14bn, driven by a 24% rise in revenue from investment banking fees.
Revenue in the consumer and business banking division was little changed at $7.43bn, while revenue from the global wealth and investment management business increased 10% to $4.50bn on higher asset management fees.
Bank of America’s shares have risen nearly 20% this year through yesterday, well below the 25% increase in the KBW index of bank stocks.
The bank’s net interest margin, a measure of the profitability of its loans, rose to 2.44% from 2.21% a year earlier.
Rising interest rates should alleviate pressure banks have faced on margins, but that trend will take time to bear fruit.
TeliaSonera
Swedish-Finnish telecom operator TeliaSonera yesterday posted an unexpectedly small drop in second-quarter profit as it cut costs in the Scandinavian market and its Eurasia unit grew.
Net profit in the April to June period fell 17% to 4.031bn kronor (€464mn, $611mn), coming in above a 3.97bn-kronor consensus by analysts polled by Dow Jones Newswires.
“TeliaSonera continues to lead the industry change in our markets by shifting away from minute based voice pricing, to new data centric models,” chief executive Per-Arne Blomqvist said in a statement.
“We maintain focus on securing our long term profitability by implementing efficiency measures and investing for the future in 4G and fibre,” he said.
The appreciation of the Swedish krona and, to a lesser degree, asset disposals weighed on net sales, which were down 4% to 25.274bn kronor.
Stripping out acquisitions and disposals, the number rose 0.4% in local currencies.
The group reiterated its full-year guidance, saying it expects sales to be flat in local currencies, and that its profit margin before interest, taxes, depreciation and amortisation will be slightly higher than last year.
“In the second quarter, organic revenue growth turned positive and margins improved further,” Blomqvist said.
In the first half of the year, the group said it had shed 1,050 of the 1,800 positions it intends to eliminate this year in the Nordic region and the Baltics.