Bank of America Corp. reported a lower-than-expected first-quarter profit and its revenue fell, sending the No. 2 U.S. bank's shares down 3 percent before the bell on Wednesday.
Net income quadrupled to $2.62 billion, or 20 cents per share, from $653 million, or 3 cents per share a year earlier as expenses dropped and the bank set aside less money to cover bad loans.
But total adjusted revenue fell 8.4 percent to $23.85 billion, partly due to lower revenue from trading in fixed income securities and mortgages.
Revenue from the fixed income, currency and commodities markets fell $829 million to $3.3 billion.
Analysts on average had expected BofA to earn 22 cents per share, according to Thomson Reuters I/B/E/S.
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BofA shares dropped 3 percent before the bell to $11.90.
Earnings in the year-earlier period were affected by a host of one-time items including a $4.8 billion charge related to the value of its debt.
Net income in the Global Banking division fell to $1.34 billion from $1.57 billion, while net income in the Global Markets arm slipped to $1.4 billion, excluding items, from $1.7 billion.
Chief Executive Brian Moynihan has made progress in building capital and settling mortgage-related lawsuits since taking over in January 2010. The bank said on Wednesday it had settled a mortgage-backed securities class action lawsuit related to its Countrywide unit for $500 million.
But Moynihan is under pressure to show that the bank can produce higher earnings at a time of low interest rates, stricter regulations and volatile economic conditions.
BofA, the last of the big four U.S. banks to report results, has pledged to cut $8 billion in expenses by mid-2015 and has said it could reduce expenses in its division that handles delinquent mortgages by $1 billion by the end of 2013.
The bank said on Wednesday it expects to save about $1.5 billion in costs per quarter, by the fourth quarter of 2013, representing 75 percent of the quarterly target. Total expenses fell 5.2 percent to $18.15 billion in the first quarter.
Like other big banks this quarter, Bank of America results were also boosted by reduced credit losses as borrowers did a better job of making their payments. The bank's provision for loan losses fell 29.2 percent to $1.71 billion.
MORTGAGE LENDING JUMPS
Bank of America said it extended more mortgage loans in the quarter, even as the home refinancing boom cooled. The bank issued $25 billion of home loans, up 56 percent from the year earlier and 11 percent from the fourth quarter.
The bank has missed out on much of the home lending boom because it scaled back its mortgage business after taking huge losses on its disastrous purchase of subprime lender Countrywide Financial in 2008. In recent quarters, it has been adding loan officers in an effort to win back market share.
BofA's litigation expenses for the quarter fell to $881 million from $916 million in the fourth quarter of 2012 and $793 million a year earlier.
BofA won permission from the Federal Reserve in March to buy back $5 billion in common stock after passing the annual stress test of big banks.
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