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.
Brutally Honest Advice for Wall Street Interns (eFinancialCareers)
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.
Strong I-Banking Performance (Financial News)
Wells Fargo’s U.S. investment banking group quietly booked a strong Q2, with revenues up 52% quarter-on-quarter and 85% year-over-year.
Something Has to Give (Bloomberg)
Skip McGee, the newly-minted chief executive of Barclays’ Americas business, is charged with improving the bank’s relationship with U.S. regulators. He’s also an advocate of “robust pay and freer capital,” so things are bound to get interesting.
Failure Not an Option (WSJ)
Taxpayers will never again need to support a floundering financial firm, said Treasury Secretary Jacob Lew, who believes the concept of banks being “too big to fail” is dead and gone. Many don’t agree.
Red Bull Addiction (Bloomberg)
Expats trading in Asia have a few unique advantages, but you better be prepared for a rocky sleep schedule. Just ask Fortress Investment Group’s Adam Levinson.
Vague and Crafty (Reuters)
Federal Reserve Chairman Ben Bernanke was purposefully vague around when and if he’ll pull back in the reins on the Fed’s bond buying program, noting that asset purchases “are by no means on a preset course.” Judging by the commotion caused by his earlier comments, vague was the right play.
What is a CDO? (FIN Alternatives)
Former Paulson & Co. executive Paolo Pelligrini just testified at the trial of former Goldman Sachs banker Fabrice Tourre. Let’s just say it was interesting.
Buzz Around the Office
My Mom is Going to Kill Me (Deadspin)
An 18-year-old baseball fan challenged Twitter on Tuesday night and lost big. More than 1,000 retweets of his message and he would run onto the field during the MLB All Star Game. Followers did their part, he sheepishly did his, and then got tackled – hard.
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.
(Source: AOL Jobs)