Bank of America drastically shrank its legal expenses to post a profit. But it clearly underperformed rival JPMorgan Chase. Fred Katayama reports.
Bank of America swung to a profit from a quarterly loss, drastically shrinking the legal expenses that dragged them into the red this time last year. That suggests it may be past the worst of its legal troubles. But it clearly underperformed its stronger rival, JPMorgan Chase, which reported on Tuesday. B of A's revenue fell. Trading revenue from fixed income and currencies was down 7 percent, and its investment banking revenue fell, too. While it benefited from the volatility in the currency market, it was weighed down by trading declines in bond and mortgage securities. On the positive side, mortgage banking revenue rose sharply. CEO Brian Moynihan expressed optimism about the near term outlook for the economy, noting that consumer spending and credit use by businesses were rising. His bank's earnings missed analysts estimates. And its stock, one of the worst performers among big banks this year, added to its 13 percent year-to-date loss in early trading. CLSA bank analyst Mike Mayo called B of A's performance "lackluster," saying, "It raises questions as to why the CEO recently got promoted to chairman. And I support the proposal at the annual meeting that would require analyzing breaking up the bank. If anywhere, the breakup question is more relevant to B of A versus JPMorgan." On Thursday, investors will be combing through the results of Goldman Sachs and Citigroup.