Market Overview

Bank of America's Q1 - Strong Trading and Capital Lift Shares

Bank of America (NYSE: BAC) released its first quarter earnings for 2012, which saw a plunge to net income of $653 million, down 68 percent from a year ago. Earnings per share for the quarter, were 3 cents, down from 17 cents a year ago

Although the picture painted by the numbers is not pretty, once we look past $4.8 billion written off from the narrowing of credit spreads (28 cents per share) EPS was $0.31.That compares positively with consensus expectations of $0.12.

The company saw one of its highest level in sales and trading revenues. Fixed income, currencies and commodities (FICC), excluding losses in spreads (DVA) were $4.1 billion, up $432 million, fueled by improving sentiments in global markets. FICC increases offset declines in equities trading and sales, which excluding spread effect, was down 233 million to $1.1 billion, down mainly due to lower volumes and commissions.

BofA's Consumer and Business Banking segment saw mixed results, partly due to debit card interchange fee rules from the Durbin Amendment and lower yields on a fewer loans due to moderate demand. Credit card issuances were up 19 percent, however, from the first quarter a year ago.

The company's troubled mortgage arm, Consumer Real Estate Services, reduced its loss to $1.1 billion from $2.4 billion in the same period last year. Revenue was higher at $2.67 billion from $2.06 billion YoY. Continued high costs for delinquent and defaulted loans, as well as other legacy exposures, contributed to the loss continuance.

Bank of America continued to strengthen its balance sheet, boosting equity and capital Tier 1 ratios, increasing liquidity and reducing debt. The company also continued to cut cost, reducing headcount further for the quarter.

The company closed at $8.92 yesterday and is up about 3.7 percent in premarket trading.

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