BofA posts quarterly profit as chief takes aim at expenses

Expenses Drop

Expenses excluding interest dropped to $17 billion from $19.1 billion in the first quarter and $22.9 billion in the second quarter of 2011, with the staff shrinking by 3,228 from the end of March to 275,460 full-time workers, according to the statement.

Bank of America said mortgage-banking income rose in the most recent period, with first-lien originations advancing 18 percent from the first quarter, and the company put aside less money to cover refunds for investors on soured loans. The $1.77 billion provision for credit losses declined from $3.26 billion a year earlier and was the smallest since 2007. The real estate unit’s loss narrowed to $768 million from $14.5 billion.

Sales and trading revenue at the markets unit slipped to $3.2 billion in the second quarter of 2012, from $3.8 billion in the first quarter and $3.7 billion in the second quarter of 2011. Excluding an accounting adjustment for changes in debt values, sales and trading revenue dropped to $3.3 billion from $5.2 billion in the first quarter of 2012 and $3.6 billion 2011’s second quarter.

Consumer Bank

Income in consumer and business banking slipped to $1.2 billion from $2.5 billion a year earlier, with the company citing lower revenue and higher provisions for card losses.

Concern that Europe’s debt crisis might engulf U.S. banks has weighed on shares of lenders. Bank of America said today its holdings at risk in Greece, Italy, Ireland, Portugal and Spain declined to $9.6 billion from $9.8 billion on March 31.

The first phase of Moynihan’s efficiency plan, called Project New BAC, will trim $5 billion in costs from deposit, credit-card and mortgage operations. That brings Moynihan’s target for cost-cutting to $8 billion, and he said today the savings should be in place by 2015. The CEO has said the second phase will result in fewer job reductions than the first because investment banking and trading units have smaller staffs.

Moynihan divested more than $50 billion in assets to make the firm more focused and boost capital levels. The bank is in talks to sell its non-U.S. wealth-management operations to Julius Baer Group Ltd., the Zurich-based firm said last month.

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