Bank of America (BAC) said Thursday that its first-quarter net income dropped 13% from a year ago on weaker trading revenue and interest income. Like other banks, including Wells Fargo (WFC), it put aside more energy-related loan loss reserves.
BofA’s net income was $2.7 billion in Q1’16 vs. $3.1 billion in Q1’15. Earnings per share were $0. 21, just beating equity analysts’ average estimate.
Total revenue, including net interest income and noninterest income, was $19.7 billion – a drop of 7% from last year and below analysts’ estimate of $20.3 billion for the quarter.
“This quarter, we benefited from good consumer and commercial banking activity. Our business segments earned $4.5 billion, up 16% from the year-ago quarter,” said CEO Brian Moynihan, in a statement. “This was partially offset by valuation adjustments from lower long-term interest rates and annual compensation expenses.”
Its net interest income was $9.2 billion vs. $9.4 billion in Q1’15 while its credit loss reserves were $997 million, up from $765 million a year ago, due to the commercial portfolio’s exposure to the energy sector.
The bank reported some $21.9 billion in energy loans vs. $21.3 billion in Q4’15. It has put aside $525 million to cover potential energy loan losses and says its exposure to high-risk subsectors of the energy sector represent less than 1% of its total loans and leases.
The wealth and investment management unit’s revenue dropped about 2% to $4.4 billion on weaker noninterest income. The unit’s net income, though, rose 13% year over year to $740 million due to “solid expense management.” Its pretax margin for the period was 26% vs. 23% in Q1’15.
The number of advisors with Merrill Lynch stands at 14, 413, up slightly from the prior year’s headcount of 14,185 but down from the earlier quarter’s 14,499.
Advisors produced an average level of yearly fees and commissions of $983,000 as of Q1’16 vs. $1.04 million in the year-ago period and $995,000 in the prior quarter.
Average deposit balances grew nearly by $17 billion, or 7%, as average loans and leases improved by nearly $12 billion, or 9%.
Total client balances were $2.46 trillion vs. $2.51 trillion a year ago. Moreover, client flows went into negative territory at -$600 million in Q1’16 vs. positive flows of $14.7 billion in the year-ago period and $6.76 billion in the prior quarter.
The unit says it had a “strong quarter in the institutional retirement business with $7 billion of funded sales from large 401(k) plan wins.”
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