Bank of America Corp, the No 2 US bank by assets, reported its biggest quarterly profit in nearly four years yesterday as mortgage banking revenue soared and expenses fell to their lowest since the financial crisis.
BofA’s legal expenses, which have totalled at least $70bn since 2008, dropped for the second straight quarter, suggesting the worst of the bank’s legal problems stemming from the financial crisis was behind it.
Net income attributable to Bank of America’s shareholders more than doubled to $4.99bn, or 45 cents per share, in the second quarter ended June 30 from $2.04bn, or 19 cents per share, a year earlier.
Analysts on average had expected earnings of 36 cents per share, according to Thomson Reuters I/B/E/S. However, it was not clear if the reported figures were comparable.
Litigation expenses, which had undermined the cost-cutting initiatives introduced by Chief Executive Brian Moynihan since he assumed the top job in 2010, fell to $175mn from $4bn a year earlier. “We also benefited from the improvement in the US economy, where we are particularly well positioned,” Moynihan said.
BofA’s shares were up about 3% at $17.63 in morning trading on the New York Stock Exchange.
The bank’s non-interest expenses fell 25.5% to $13.82bn in the quarter, while net interest income rose 4.7% to $10.49bn. Overall revenue, excluding adjustments, rose 1.7% to $22.12bn.
The fourth-biggest US mortgage lender said its mortgage banking revenue almost doubled to $1bn.
More than half of the quarter’s new mortgage loans were for home purchases, rather than the refinancings that previously drove revenue in the business.
BofA is less exposed to interest rate-sensitive government securities than some of its competitors, focusing more on trading credit instruments such as corporate bonds. BofA’s core net interest income is expected to rise over the rest of 2015 even without interest rate hikes, the bank’s chief financial officer, Bruce Thompson, said on the call.