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Bank of America’s Global Banking Outperforms Other Segments

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Apr. 27 2015, Updated 9:06 p.m. ET

Global Banking segment’s net income increases

Bank of America’s (BAC) Global Banking segment’s net income increased 6% from the year-ago quarter. The increase was driven by a decline in non-interest expense and a reduction in the provision for credit losses. It was partially offset by lower net interest income. Bank of America forms ~5.8% of the Financial Select Sector SPDR ETF (XLF).

Advisory and equity underwriting fees were up, but leverage finance business was down on account of regulatory guidance implemented during the first half of 2014.

JP Morgan (JPM) also reported strong growth in its advisory fees in the quarter.

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Low rates impact Consumer Banking results

Bank of America’s Consumer Banking segment’s revenue was down 3% compared to 1Q14. The decline was driven by lower net interest income, card yields, and card loan balances. Net income was slightly up year-over-year due to tight expense management. Citigroup (C) also reported a decline in year-over-year US card loan balances in the quarter.

The segment’s earnings were seasonally down from the previous quarter. The above graph compares Bank of America’s segmental net income for the quarter with the previous and year-ago quarters.

Wells Fargo (WFC) reported a year-over-year decline in its community banking segment’s net income on account of higher expenses.

Client brokerage assets increased 18% from the year-ago quarter, driven primarily by new client accounts, strong account flows, and higher market valuations.

Wealth Management client balances up 5%

The bank’s Global Wealth and Investment Management segment’s net income was down compared to the first quarter of 2014. Even though revenues were stable, an increase in non-interest expense, due to an increase in revenue-related incentive compensation and investment in client-facing staff, impacted net income.

The segment’s client balances increased to more than $2.5 trillion, driven by higher market levels and net inflows.

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