(Bloomberg News) Bank of America Corp., this year's worst performer in the Dow Jones Industrial Average, swung to a third-quarter profit on higher revenue, better credit quality and one-time gains. The stock rose in early trading.
Net income of $6.23 billion, or 56 cents a diluted share, compared with a loss of $7.3 billion, or 77 cents, a year earlier, the Charlotte, North Carolina-based lender said today in a statement. Total revenue rose 6 percent to $28.7 billion, beating the consensus of analysts surveyed by Bloomberg.
"You're knocking it out of the park with $3 billion extra" in revenue compared with estimates, said Michael Holland, chairman of New York-based Holland & Co., in an interview with Ken Prewitt and Tom Keene on Bloomberg Surveillance. For some investors, the issue is "the amount of stuff that you have to go through to get to, 'what is the health of the business?'"
Chief Executive Officer Brian T. Moynihan, 52, has presided over a 55 percent drop in the stock this year. He vowed to make the lender smaller and more profitable by divesting unnecessary businesses and trimming $5 billion in costs, mostly by eliminating 30,000 jobs. He's agreed to sell almost $50 billion in assets and units since taking over as CEO last year.
One-Time Events
The quarter's results were skewed by one-time pretax gains including $4.5 billion in fair-value adjustments of structured liabilities, $3.6 billion from selling a stake in China Construction Bank Corp. and $1.7 billion tied to changes in value of the company's debt. One-time pretax losses included $2.2 billion related to private-equity investments.
The provision for loan losses dropped to $3.4 billion from $5.4 billion a year earlier as credit improved in the card unit and commercial lending, the bank said. The card unit swung to a profit in the quarter, while income rose at the deposit unit, global wealth and investment management, and global commercial banking.
Global banking and markets, which includes the investment bank, posted a $302 million loss, compared with a $1.5 billion profit a year earlier, on lower sales and trading revenue.
The bank's mortgage division posted a $1.1 billion net loss, wider than the $392 million year-earlier loss and smaller than the $14.5 billion loss in the second quarter. Revenue slipped 22 percent to $2.8 billion as the lender created fewer new mortgages. The provision for loan repurchase demands dropped to $278 million from $14 billion in the second quarter.
Mortgage Claims