July 17, 2013

BofA Boosts Profits 63% as Merrill Advisors Top $1M in Production

As the bank cuts costs, its wealth management unit improves net income 38% to $758 million

CEO Brian Moynihan of Bank of America. (Photo: AP) CEO Brian Moynihan of Bank of America. (Photo: AP)

Bank of America (BAC) said Wednesday that its second-quarter net income rose 63% to $4.0 billion, or $0.32 per share, from $2.5 billion, or $0.19 per share, a year ago, which beat analysts’ estimates. Revenue improved 3% to $22.9 billion from $22.2 billion last year.

"We are doing more business with our customers and clients, and gaining momentum across every customer group we serve," said CEO Brian Moynihan, in a press release. "We must keep improving, but with the consumer recovering and businesses strong, we have lots of opportunity ahead.

The bank cut expenses about 6% to $16 billion. It also trimmed close to 7% of its positions over the past 12 months and now has some 257,000 employees.

"At the beginning of the year, we said we would focus on three things revenue stability, strengthening the balance sheet and managing costs," said CFO Bruce Thompson, in a statement. "This quarter, we delivered on all three. Revenue increased 3%, we continued to build capital ratios, despite the negative impact of higher interest rates on our bond portfolio, and we reduced expenses related to servicing delinquent mortgage loans at a faster rate than we originally expected."

Wealth Management  

BofA-Merrill Lynch’s Global Wealth and Investment Management unit increased its net income 38% from the second quarter of 2012 to $758 million. In addition, its pretax margin was 28% in the recent period vs. 21% in the year-ago quarter.

Revenue grew 10% year over year to $4.5 billion. The results were driven by “higher asset management fees related to higher market levels and long-term AUM flows, higher transactional revenue and higher net interest income,” the company says.

The number of financial advisors was 15,759 as of June 30, down 306 from 16,065 in the first quarter and a decrease of 1,005 reps from the year-ago quarter. Merrill Lynch FAs had average yearly fees & commissions of over $1 million as of Q2’13, up from $971,000 as of Q1’13 and $895,000 as of Q2’12.

The number of GWIM advisors was 16,989 in the second quarter vs. 17,293 in the prior quarter and 18,060 last year, while the total headcount for client-facing financial professionals was 19,689 in Q2’13 vs. 20,018 in the prior quarter and 20,844 a year ago. US Trust has 2,084 reps.

Net AUM flows for the wealth unit were $7 billion in the second quarter, down from $18 billion in the prior quarter, but up from $3.7 billion a year ago. For the first six months of 2013, total flows stood at $25 billion vs. $11.4 for the same period in 2012.

Client balances rose 8% (excluding certain balance transfers) from the year-ago quarter to $2.22 trillion, “reflecting higher market levels and net inflows, driven by client activity in long-term AUM, deposits and loans,” according to the bank; client balances in Merrill Lynch accounts were $1.8 billion. Total GWIM assets under management rose $76.2 billion, or 11%, year over year to $743.6 billion.

Asset-management fees grew 10% year over year to $1.7 billion, while long-term AUM flows more than doubled from the year-ago quarter to $7.7 billion.

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