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BofA Profit Jumps in Q1 as Wealth Unit’s Asset Flows Top $29B

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Bank of America’s first-quarter profits jumped 40% to $4.86 billion, up from $3.47 billion a year ago. Per-share earnings were $0.41, beating estimates and last year’s $0.38 EPS.

Revenue rose 7% to $22.25 billion from last year; on an adjusted basis, sales were $22.45 billion, which also surpassed analysts’ estimates.

The bank’s net interest income also increased 7%, hitting nearly $11.1 billion in Q1’17; BofA had projected this figure would just be $600 million.

(Related: 11 Best & Worst Broker-Dealers: Q4 Earnings, 2016)

“We saw good client activity in our balanced portfolio of businesses: consumer spending was up, our wealth management business had strong asset management flows, investment banking fees rebounded nicely, and we continued to provide credit and capital to our corporate and institutional clients to help them drive the economy forward,” said CEO Brian Moynihan in a statement.

Wealth Results

Global Wealth & Investment Management had net income of $770 million, up 4% over last year, as revenue grew 3% year over year to $4.6 billion “driven by higher asset management fees and net interest income, which more than offset lower transactional revenue,” the bank says.

Long-term AUM flows hit $29.2 billion for the quarter, thanks to “strong client activity and also in part by assets in IRA brokerage accounts transitioning into managed relationships,” it explains. The long-term flows were $18.9 billion in Q4’16 and -0.6 billion.

The group had a pre-tax margin of 27% vs. 26% a year ago and 23% in the prior quarter.

Total client assets were close to $2.6 trillion, up about $119 billion (or 5%), from a year ago and also up $76 billion from the earlier period. Referrals to and from wealth businesses grew 25% from Q1’16.

Merrill Movement

Though the number of advisors grew 72 from a year ago, the total figure fell 145 to hit 14,484 as of March 31.

“The decline is due in large part to a combination of seasonally lower hiring during the quarter and an expected increase in advisor retirements – nearly all of whom are part of our client transition program,” the business group said in a statement.

In terms of the number of experienced FAs, this figure rose due to “a successful number of graduates from our training program, competitive recruiting and low competitive advisor attrition levels,” it adds.

Advisors’ average yearly level of fees & commissions hit $1.3 million per veteran rep, up from $1.25 million in Q4’16. Total advisor productivity stands at $1 million vs. $960,000 in the prior quarter.

Assets held in Merrill accounts were $2.2 trillion, a jump of $169 billion (or 9%) from a year ago and $65 billion (or 3%) from the prior quarter. The group’s revenue of close to $3.8 billion is up 3% from last year and 5% from the earlier period.

“Most of our advisors have a combination of fee-based and commission-based (hybrid) relationships based on client choice and need. Today, 66% of our advisors (compared to 36% five years ago) have 50% or more of their client assets under a fee-based relationship,” the company said in a statement. 

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