Bank of America falters yet still paces JPMorgan in key sectors

While Bank of America reported a first quarter loss of $276m, driven mainly by $6bn in legal expenses related to the financial crisis, many of the bank’s underlying numbers looked good, at least when compared to the competition. Here's how the results affect the banks' employees.

Job cuts in mortgage and trading

Headcount fell to 238,560, down 9% year-over-year and 1.5% from the fourth quarter of 2013.  The bank’s mortgage department took the brunt of the punishment, with headcount dropping a massive 11% over the last three months. CFO Bruce Thompson suggested that additional mortgage cuts are inevitable. “We continue to reduce production staffing levels in the quarter consistent with the volumes,” he said on the analyst call. Mortgages fell 65% year-over-year.

BofA also reportedly began cutting staff in its investment banking and trading units last month, although it’s unclear how many employees have already been affected. Bank of America has cut more than 24,000 jobs in the last 12 months. Not including litigation costs, expenses are down 6% year-over-year, but the bank still has a ways to go to meet its 2015 goal. It'll need to knock off roughly $300 million a quarter over the next year.

Hiring in audit

With all of its regulatory headaches, Bank of America has been hiring aggressively in its middle and back office. Thompson said that BofA has roughly doubled the size of its audit team since 2010.

FICC numbers not that bad, considering

Like other big banks that have already reported, Bank of America saw revenues from fixed income, currencies and commodities fall sharply from a year ago. When excluding a one-time write-down, FICC trading was down 15% year-over-year, yet BofA still managed to outperform its competitors. J.P. Morgan’s FICC revenues were down 21%. Citi, meanwhile, saw an 18% drop. Compared to the fourth quarter of 2013, BofA’s fixed income revenues actually increased 42%.

Same for equities

Equities sales and trading revenue at Bank of America remained relatively flat. By comparison, revenues rose 13% at Citi in the first quarter. They were down 3% at J.P. Morgan.

Strong IBD results

Bank of America reported a net $1.5bn in investment banking fees in the first quarter, beating out both J.P. Morgan ($1.4bn) and Citi ($1.17bn). Expenses were up, in part, due to the hiring of additional client-facing personnel. Like J.P. Morgan, BofA was strong in M&A. The bank booked $286m in advisory fees, up from $257m a year ago.

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