Bank of America Wins at ‘Expense’ of Employees
Another day, another strong earnings report from a major Wall Street bank. Bank of America says second-quarter profit jumped 63% to just over $4 billion, easily trumping analysts’ expectations. But unlike rival banks that relied on strong revenue gains to mint their balance sheet, BofA focused more on cost-cutting.
Bank of America’s net income spiked despite just a 3.5% increase in revenue. J.P. Morgan, Goldman Sachs and Citigroup, meanwhile, recorded strong Q2 profits while booking revenue gains of 14%, 13% and 12%, respectively.
BofA cut its payroll by 6.6% over the last year and 2.2% quarter-over-quarter. Its personnel expenses shrank by $200 million over the last year, according to Bloomberg. Bank of America also set aside less money for bad mortgages and litigation and paid less interest on its own borrowings. The bank’s total assets fell slightly during Q2.
The quarter is still a win for Bank of America – it needed to cut costs and eliminate redundancies – but losing the revenue war is concerning. In a particularly ominous sign, BofA’s home lending unit, once a hallmark business for the bank, continued to struggle. Mortgage-banking income dropped 22% year-over year, and the vast majority of the bank’s mortgage gains were from refinancing. Rising interest rates certainly won’t help.
We reached out to four vice presidents on Wall Street to capture the dos and don’ts of being an intern. They gave us the real dirt.
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Buzz Around the Office
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List of the Day: Great Bosses
If you want to be a great boss, do this.
- Provide constant feedback.
- Reward good work.
- Accept responsibility more than credit.