Bank of America (BAC) reported net income on Tuesday of $6.2 billion, or $0.56 per share, for the third quarter vs. a net loss of $7.3 billion, or $0.77 per share, last year–topping analysts’ estimates by a wide margin. Revenue, net of interest expense (and calculated on a fully taxable-equivalent basis) rose 6% to $28.7 billion.
Its global-wealth operations, no longer led by Sallie Krawcheck, reported year-over-year increases in revenue and net income, as the total number of advisors at Merrill Lynch grew by about 500 to 16,722 on the expansion of the Merrill Edge platform. Sequentially, the unit reported slightly lower sales and profits vs. the second quarter of 2011.
“This quarter’s results reflect several actions we took that highlight our ongoing transformation toward becoming a leaner, more focused company,” said CEO Brian Moynihan in a press release. “The diversity and depth in our customer and client offerings provided some resiliency in a very challenging environment.”
The bank’s latest results were affected by $4.5 billion adjustments on structured liabilities, a pretax gain of $3.6 billion from the sale of shares of China Construction Bank, a $1.7 billion pretax gain in trading debit valuation adjustments, and a pretax loss of $2.2 billion related to private equity and strategic investments, excluding CCB. The year-ago quarter included a $10.4 billion goodwill impairment charge, according to the company.
“Our focus this quarter was on strengthening the balance sheet by selling non-core assets and building capital to position the company for future growth,” said CFO Bruce Thompson in a statement. “In that regard, we accomplished a great deal. We reduced the size of our balance sheet by $42 billion from the second quarter of 2011, nearly doubled our Tier 1 common equity ratio since early 2009, and continued to have strong liquidity levels even after significantly reducing both short- and long-term debt.”
The unit, now led by BofA co-CEO David Darnell, saw its net income rise 29% from the year-ago quarter to $347 million, which was a 31% decline from the second quarter of 2011 (due to a higher provision for credit losses and other factors).
The wealth-management unit had a return on average equity of 7.72% in the most recent quarter, which is up from 5.91% a year ago, but down from 11.54% in the second quarter.
Revenue was $4.2 billion, an increase of about 9% percent year over year, driven by higher asset management fees, net interest income, and transactional activity; sales moved down 6% from the second quarter.