Bank Of America Misses Revenue By $2 Billion As Trading Revenue Collapses; Fires Thousands

Following disappointing results from JPMorganChase (JPM) and Wells Fargo (WFC) yesterday, it was Bank of America’s (BAC) turn to “surprise” investors with its disclosure just how bad its quarter was. And with the bank reporting a 50% collapse in its sales and trading from Q3, down $600 million from a year ago to just $1.7 billion in Q4, it should come as no surprise that the bank just reported Net Income, before the usual spate of amusing addbacks, of $0.25 well below the $0.31 expected. And while one may argue whether ot not BofA’s EPS deserve non-GAAP adbacks, it was the Revenue of $18.96 billion, which missed expectations of $21.03 billion by over $2 billion (!) and down $2.7 billion from a year ago, that was truly a showstropper and shows that without the Fed’s visible hand manipulating markets every day, banks are a ticking time bomb just waiting to blow.

 

 

In BofA’s own words: “Bank of America Corporation today reported net income of $3.1 billion, or $0.25 per diluted share, for the fourth quarter of 2014, compared to $3.4 billion, or $0.29 per diluted share in the year-ago period. Revenue, net of interest expense, on an FTE basis(B) was $19.0 billion, compared to $21.7 billion in the fourth quarter of 2013.”

And keep in mind that the $4.5 billion in pretax earnings included the usual piggybank accounting gimmick of adding back of $0.7 billion in loan loss reserve releases.

 

 

Here is the collapse in Sales and Trading, regardless of whether one observes it with or without DVA/FVA:

 

 

But here is the best indicator of what BofA’s earnings truly were: its headcount. And after firing over 4K FTEs, or down 2.5% from the prior quarter, dropping the total FTE count to 207.9, one can see which way management is positioned.

 

 

The good news is that the criminal enterprise that is BofA only had to pay $393 million in litigation expenses, far below the $2.3 billion a year ago. Then again, putting in context, BofA paid up $16.4 billion and $6.1 billion in 2014 and 2013, respectively, in “cost of doing business as a criminal enterprise.”