Bank of America cuts costs to get back in the black
Bank of America swung back to profit in the first quarter of the year as diving costs offset a small fall in revenues to improve the giant lender’s fortunes.
Profits came in at $2.98bn (£2bn) for the quarter, compared with a loss of $514m in the same period of 2014.
Revenues slid six per cent to $21.2bn, while expenses tumbled 29.4 per cent to $15.7bn. A major factor in that reduction was a big drop in the bank’s litigation costs, down more than 90 per cent from $6bn in the first quarter of 2014 to $370m this year.
Bank of America Merrill Lynch also cut its headcount back to 219,658, down almost 19,000 on the year.
Global banking net income increased 5.7 per cent to $1.37bn, while consumer banking profits edged up 0.5 per cent to $1.48bn.
But some areas performed more poorly. Global wealth and investment management profits slid 10.7 per cent to $651m, despite an increase in assets under management.
And global markets net income dived 28 per cent on the year.
The fall in global markets hides huge variations within the division.
Foreign exchange sales and trading revenue hit a record high. But it also saw bond trading revenues slide, more than outweighing those currency gains. Investors were disappointed with the scale of the profits, and the bank’s shares fell 1.14 per cent.