Bank of America profits surge by $2.668 billion in 2013
Bank of America Corp appears to have shaken off the impact of the Great Recession as its profit for the fourth quarter of 2014 surged by $2.668 billion, from $732 million ($0.03 per diluted share) in Q4 2012 to $3.4 billion ($0.29 per diluted share).
Bank of America reported a 15% increase in revenue to $21.7 billion in the fourth quarter, and a significant reduction in mortgage losses.
For the whole of 2013, net income rose to $11.4 billion ($0.90 per diluted share) compared to $4.2 billion ($0.25 per diluted share) the year before. Net of interest expense, revenue (on an FTE bases) increased by 7% to $89.8 billion.
The Wall Street Journal quoted Gerard Cassidy, an RBC analyst, who said “Bank of America’s core businesses delivered good growth, especially in capital markets, while the company continues to chop away at its legacy issues.”
Bank of America Corp’s Chief Executive Officer Brian Moynihan, said:
“We are pleased to see the core businesses continue to perform well, serving our customers and clients. While work remains on past issues, our two hundred forty thousand teammates continue to do a great job winning in the marketplace.”
Bruce Thompson, Chief Financial Officer, said:
“We enter this year with one of the strongest balance sheets in our company’s history. Capital and liquidity are at record levels, credit losses are at historic lows, our cost savings initiatives are on track and yielding significant savings, and our businesses are seeing good momentum.”
Bank of America, the second largest bank in the US, took on a massive burden of bad mortgages when it acquired Countrywide Financial Corp in 2008 just before the financial crisis. The acquisition cost the bank over $45 billion in legal settlements and write-downs.
Bank of America mortgages losses fell
Today, Bank of America announced that mortgage losses dropped to $1.1 billion in the fourth quarter of 2013 compared to $3.7 billion in Q4 2012. In 2011 the bank had to pay out over $5 billion in settlements with the federal government and Fannie Mae.
Some remnants from the financial crisis still linger, however. During the fourth quarter of 2013, litigation expenses increased to $2.3 billion compared to $916 million in Q4 2012. Most of the recent litigation is related to issues that led to the US government having to bail out the bank two times.