Bank Of America's Earnings Jump 70 Percent On Cost-Cutting
Source: Huffington Post
NEW YORK — Bank of America says its second-quarter profits soared, helped by higher earnings from investment banking and cost-cutting. The results beat analysts' expectations. The bank earned $3.6 billion in the quarter after payments to preferred shareholders. That was up 70 percent from $2.1 billion a year ago.
Per share, that worked out to 32 cents. Analysts polled by FactSet had expected 25 cents per share. The bank's stock rose 1 percent in pre-market trading. Bank of America, the country's second-biggest bank by assets, has been slimming down and cutting jobs since CEO Brian Moynihan took over at the beginning of 2010, a departure from the empire-building of his predecessors. The strategy meant to make the bank easier to manage and to escape potential extra scrutiny from regulators.
In the second quarter, the bank slashed expenses about 6 percent, to $16 billion from $17 billion a year ago. It also cut about 18,300 jobs over the year, or nearly 7 percent of its work force. The bank now has about 257,000 employees, down about 11 percent from its peak of nearly 289,000 in early 2011. In a call with reporters, Chief Financial Officer Bruce Thompson noted that some of the job cuts were in the unit that services troubled mortgages, which is shrinking as the bank works through those loans. He also said the bank had added jobs in the unit that makes new mortgages.
The bank has also been closing branches. The number of branches fell to about 5,300, down by about 260 over the year. Thompson said the bank would continue to trim branches, and indicated that the bank would sell branches in more rural areas – in locations "outside of our principal operating areas" and where the bank didn't have "a critical mass of consumers." Bank of America benefited from lower litigation expenses, having already settled several high-profile lawsuits related to its mortgage unit earlier this year. It also was able to shrink the unit that services troubled mortgages.
Read more: http://www.huffingtonpost.com/2013/07/17/bank-of-america-earnings-2013_n_3609865.html
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