BofA says quarterly profit quadruples as mortgage costs ebb

FICC Results

Global markets, the trading operations overseen by co-Chief Operating Officer Thomas K. Montag, posted a 3.9% drop in quarterly profit to $341 million excluding accounting adjustments tied to credit. Revenue in the division rose 16% to $3.8 billion on rising equities results.

Revenue in the fixed-income, currency and commodities sales and trading division increased 16% $2.1 billion on stronger results in credit and mortgage products. Equities sales and trading revenue added 27% to $904 million on increased market volumes. Income at the global banking unit fell 9% to $1.27 billion on a higher provision for credit losses.

“We feel very good about the pipelines that we have in the investment banking business,” Thompson said in remarks to reporters. The year is off to a “reasonable start,” and “there’s nothing at this point that would have me send up a note of caution besides just realizing that the fourth-quarter was extremely strong.”

Cost Savings

Profit increased 36% to $1.97 billion at consumer and business banking, run by David Darnell, and losses narrowed in consumer real estate to $1.1 billion from $3.7 billion. First-mortgage originations declined 46% as demand faded, the bank said. Global wealth and investment net income rose 35% to a record $777 million, according to the bank.

The efficiency ratio, a gauge of cost controls, deteriorated to 80% from 75% in the third quarter, while improving from 97% a year earlier. The bank said it met its cost-cutting targets for 2013. Moynihan eliminated 5,826 full-time jobs during the quarter, reducing the staff to 242,117, a 9% annual drop.

Litigation expense was $2.3 billion before taxes. Results benefited from a $1.9 billion drop in its credit provision from the year-earlier period amid falling loan losses. Reserve releases will slow down in 2014, Thompson said.

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