Bank of America Global Markets' Profit Falls Quarterly, Rises YOY

The second quarter proved to be mixed for Bank of America’s Global Markets business, which includes services such as prime brokerage and clearing, as it booked a net income of $1.1 billion during the quarter, a $207 million (15.8%) drop since last quarter but a 14.4% gain over the second quarter of 2013.
By Rob Daly(2147487629)
The second quarter proved to be mixed for Bank of America’s Global Markets business, which includes services such as prime brokerage and clearing, as it booked a net income of $1.1 billion during the quarter, a $207 million (15.8%) drop since last quarter but a 14.4% gain over the second quarter of 2013.

Revenue for this business grew by 9% compared to last year, primarily due to higher equity investment gains (not included in sales and trading) and increased investment banking fees, says the bank.

The bank’s Global Transaction Services business, which includes services such as payments and custody, saw total revenue rise slightly to $1.485 billion, which is $10 million more than last quarter and $50 million (3.5%) more than the same period last year. However, this gain came from increases in the corporate banking business, as commercial banking activity in this sector fell 2.2% since last quarter and 1.9% year over year.

Overall, the bank’s $4 billion mortgage-related litigation expense stemming from the financial crisis, which is down from the previous quarter’s $6 billion expense, kept overall net income to $2.3 billion, a 42.9% drop year over year.

The quarter also yielded a slight increase in the bank’s regulatory capital with its common tier 1 capital ratio rising from its Q1 numbers of 12% to 12.2%, using the standardized approach for Basel III under the transitional period. Using the standardized approach with fully phased Basell III requirements, common equity tier 1 capital rose 0.5% to 9.5%, which is higher than the 8.5% minimum the bank is required to maintain by 2019.

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