BofA Surges On Solid Earnings Beat Despite Big FICC Miss, Jump In Credit Loss Provision

Following disappointing earnings from Citi and JPMorgan, which yesterday reported the first EPS miss in 15 consecutive quarters, the market breathed a sigh of relief when Bank of America reported strong top and bottom-line results, with revenue rising 6% Y/Y to $22.7BN, beating consensus estimates of $23.35BN, and resulting in stronger than expected Net Income of $7.3BN and EPS of 70 cents, up 49% Y/Y, and well above the 63 cent forecast.

BofA performance, like Citi and JPM, has been a function of strong consumer banking income, which posted an impressive increase in 2018, even as Global Markets were generally flat for the full year…

.. largely the result of continued cost cuts across the business, which has seen its non-interest expense drop to the lowest this decade.

Going back to the 4th quarter, and looking at what did well, BofA is quick to note that it saw a 4% increase in total average deposits to a record high $1.345TN, driven by a 9% increase in Global Banking deposits.

At the same time, and in keeping with the overall cost-cutting theme, total noninterest expense was flat in Q4 versus 3Q18, as the impact of :Shared Success" year-end bonus to associates as well as higher marketing spend offset lower FDIC expense. According to BofA, compared to 4Q18, 1Q19 expenses expected to include approximately $0.5B for seasonally elevated personnel costs.

While not as impressive, average loans and leases also rose 1% Y/Y to $935BN, driven by a 5% increase in Consumer Banking loans despite a clearly slowdown in loan increases as shown below.

Confirming the strong performance of the consumer bank, Net Interest Income increased $0.8B from 4Q17 to $12.3BN, thanks to "benefits from higher interest rates as well as loan and deposit growth, modestly offset by loan spread compression and higher funding costs in Global Markets." Meanwhile, Net interest margin (or yield) of 2.48% increased an impressive 9 bps from 4Q17, while excluding Global Markets, the net interest yield was 3.03%, up 14 bps from 4Q17.

Now the not so good news: looking at the bank's asset quality, while total net charge-offs were relatively flat Q/Q and down over $300MM Y/Y, to $924MM, there was a surprising jump in provisions for credit losses, which surged in Q4 from $716MM to $905MM, similar to what JPM reported, and will likely prompt questions what BofA may be bracing for. Separately, the allowance for loan and lease losses of $9.6B represented 1.02% of total loans and leases, while nonperforming loans (NPLs) decreased $0.2B from 3Q18, driven by improvements in Consumer, with BofA noting that 49% of consumer NPLs are contractually current.

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take out consumer banking and these are not good numbers at all. But hey we don't need to look at actual proprietary performance when we can just ignore the same issues that plaque the rest of the banking sector. Lack of overall performance.

rest at link

https://www.zerohedge.com/news/2019-01-16/bofa-surges-solid-earnings-beat-despite-big-ficc-miss-jump-credit-loss-provision

>>4776524

missed this one

Actual proprietary performance.

Add in the 'spotless' tarding records it, and other banks' seem tomagically have happen and they still can't perform with it's own asset base. Consumer banking carry's the entire earnings report.

Bank of America Corporation (BAC)

26.55+0.18 (+0.68%)

At close: January 15 4:00PM EST

Pre-Market

27.88 +1.33 (5.01%)

Pre-Market: 8:07AM EST

This one is pretty bad although JPM and Shiti are close. Remember that countrywide was places here so they have much to paper over. Goldman does what it wants because it does not have a consumer banking division. It says it does but it does not. FRB even granted it a license to be one.

They come out soon.

This said last night so keep in mind going forward when these releases come out.

>>4774747 pb

I use ZH for this as it does a great job of summarizing this information. Why do I need to repeat what is already there? They do a great job at this. The rest of the stuff I ignore.

>>4776534

They all are about equal. What stands out is charge-offs and lack of performance in fixed income. Can't make $ that way they are dead banks walking. Easiest money to be had. It's done on volume and it's just not there in any of them so they gloss it over with happy numbers

Goldman Reports Worst FICC Revenue Since Financial Crisis; Stock Jumps

With Goldman the latest big bank to miss expectations on the closely watched FICC revenue line, that makes it 4 out of 4 big banks that have failed to hit consensus expectations for this all important segment.

The good news, for Goldman and the first reporting quarter for its new CEO, is that all other segments performed well, and with Wall Street expecting Goldman to report $7.54BN in revenue, the world's biggest FDIC-backed hedge fund surprised to the upside, with Q4 net revenue of $8.08BN, a 3.1% increase compared to Q4 2017.

The bottom line also beat solidly, with Goldman reporting adjusted EPS of $4.83, above the $4.53 expected, with Bloomberg noting something remarkable: the firm got almost half a billion dollars in income tax tax benefits of $467 million from the Trump tax cut in the final quarter alone providing the bank with an "enormous boost." As a result, in 2018, Goldman paid an effective tax rate of 16.2%, although looking ahead Goldman expects a tax rate this year of about 22 or 23% .

Going back to the top line, first the good news: Investment Banking revenue of $2.04BN was better than the $1.93BN expected, as was Equity Sales and Trading, which came at $1.60BN, above the $1.57BN estimate. Prop trading (i.e. investing and lending) also reported a strong number, coming in at $1.9BN, well above the $1.66BN year ago.

And now the bad news: Goldman's FICC revenue plunged 18% Y/Y, dropping to just $822MM - missing expectations of $976.3MM - and the lowest number for what is traditionally Goldman's most profitable segment since the financial crisis!

Commenting on the shockingly bad FICC number, Goldman said that 4Q18 net revenues decreased YoY "reflecting significantly lower net revenues in credit products, amid wider credit spreads and increased volatility, and lower net revenues in interest rate products."

And while the bank said the trouble in FICC came from significantly lower revenues in credit products and lower revenues in interest rate products, its commodities, currencies and mortgage trading revenues were essentially unchanged.

Additionally, in a new breakdown, GS noted that 10% of the FICC revenue mix came from financing and 90% was from market intermediation.

Yet the big drop in FICC was more than offset by strong Investment Banking revenue, which posted $2.044BN in Q4 revenue, down 5% Y/Y, but a solid outperformer in an otherwise dreary quarter. Commenting on the strong IBanking performance, Goldman said that net revenues reflected "strong M&A volumes" with "$1.2 trillion of completed M&A volumes from nearly 400 transactions in 2018" and "$1.3 trillion of announced M&A volumes in 2018, including $450 billion from transactions below $5 billion in deal value."

Additionally, "strong Underwriting net revenues in 2018 driven by increased IPO activity offsetting lower debt underwriting activity." The company also noted that net revenues in Q4 were down significantly QoQ on lower industry-wide activity.

___

Even worse fixed income performance. They do not have a consumer banking base to cover this up.

rest at link

https://www.zerohedge.com/news/2019-01-16/goldman-reports-worst-ficc-revenue-financial-crisis-stock-jumps

Last night also saw the biggest yuan intervention ever.

Add that with the BOJ meeting the first week of trading and you have a recipe for panic…currency-wise. Yen was up to 113 and they decided to intervene which dropped it to 105 initially. Now at 108.xx

WTI trying to base, for the moment at $51.50 or so. Don't want to beat that up anymoar..the VH belt. Still funny as hell though

Futures up too. Must not alow the normies to see actual bank performance.

By taking moar and moar on it's charge-off capability they can basically manufacture any results.

Goldman and Bof A's results are proof of this.

>>4776698

Muh chatlogs!

Crypto's are essentially flat now.

Ethereum has a loss of 1.36% but everything else is essentially flat based on it's movements of past.

>>4776758

I'll join you!

Can add in the 'shut down the movement by the SEC' bullshit too. Came in last night with it again.

Deflation Strikes - US Import Prices Tumble In December As Petroleum Plunges

After a mixed picture from producer prices yesterday, import (and export) prices are expected to tumble MoM (as China's deflationary impulse ripples across the globe).

US import prices tumbled 0.6% YoY in December - the weakest since Sept 2016 - and export price growth slowed to its weakest since July 2017.

Although MoM shifts were modestly better than expected (Import -1.0% vs -1.3% exp, and Export -0.6% vs -0.7% exp), the slowdown from November (extending the slowing trend of the last six months) has accelerated.

The biggest downbeat factor is the 11.6% plunge in Petroleum import prices (following a 16% drop in November) and export prices of industrial supplies tumbled 3.2% in December (after dropping 2.8% in November).

Interestingly, despite the recent China data, import prices from China flatlined in December - admittedly hovering near their lowest since 2007.

https://www.zerohedge.com/news/2019-01-16/deflation-strikes-us-import-prices-tumble-december-petroleum-plunges

regarding the krassentwats or fucks or whatever we call them. Has anyone tagged the twatter accounts with any of this crap?

don't do soc media so can't do it. Do not even view it so the info I have about it comes from you.

>>4776808

BTW this is good for us but having to report it is not good for the system.

>>4776825

think it's hilarious that they post about taking us down and then accuse me of doing exactly what they are doing. Posting penny stock crap and then imploring everyone they are 'saving the movement from itself'.

They have a movement alright. Needs to be flushed down

>>4776832

Inside sales are first 2..there are moar so look at link if you want here. There is much.

Third pic is buys..not so much here.

There are good people in good company's so do not think I always highlight the bad stuff. Just not enough of them.

https://www.finviz.com/insidertrading.ashx?tc=2

>>4776890

>>4776932

>>4776939

it gets dropped or shuffled to bottom?

I know about twatter..just refuse to use it or look at it.

>>4776986

found this. take it

>>4776557

too funny baker.

wouldn't want to post anything about 'earnings' would we now?

your discretion as always

kek!

CTA Shorts Covered (and now small long)?

Since 2016 the CTA index (white line, “hedge funds” mainly in the model trading niche) has been going one way, lower, while the SPX (orange) has been going higher (until the “hick up” last quarter). The aggregate pool of money they manage is big, but not huge, but given the fact leverage is used, these “guys” can actually move prices, especially in markets where liquidity is low.

Longer term they probably aren´t overly significant movers of prices, but in the short term the CTA space can most probably affect prices, and create a feedback loop where any short-term moves are exaggerated by models adding to a certain trend, but often overlooking the liquidity effect.

We have written on several occasions about the poor liquidity and the CTA index strategies affecting prices, and it is according to us what happened late last year as well as this year. In early January we outlined our logic that being “Bearish is not unique here” (SPX was 6% lower back then).

We have shown how the CTA models flipped their strategies into net short as markets took the last dip lower in December. “Pushing” futures lower around Christmas was probably not overly hard to accomplish as liquidity always is awful around those holidays.

At one stage in late December, the CTA index had taken back much of the p/l pain from the October sell off, but as markets reversed sharply higher, the average model fund seems to have been trapped in net shorts, and as liquidity has been rather poor, the covering of these shorts have been working the same way as in late December, but this time in a feedback loop the “wrong” way for the CTA players.

Several of the bigger CTA funds are down some 3% YTD, but have actually been putting on gains over past few days. Note the last little uptick in the CTA index (white) in the below chart.

We ask ourselves if this last rally in equities is to be attributed largely to the CTA model chasers, who now seem to have covered shorts and risk having flipped over to net longs, all executed in another poor liquidity mark.

____

in other words the system does not have the power of shorts covering to fuel the 'rally'

https://www.zerohedge.com/news/2019-01-16/cta-shorts-covered-and-now-small-long

Stocks rise as Goldman Sachs, BofA post strong results.

-U.S. stocks climbed as major financial institutions posted strong quarterly results. Investors also awaited the outcome of a no-confidence vote for U.K prime minister Theresa May’s government and digested the People’s Bank of China’s latest injection of stimulus into the country’s economy.

The S&P 500 (^GSPC) rose 0.33%, or 8.7 points, as of 9:39 a.m. ET. The Dow (^DJI) rose 0.43%, or 104.35 points, while the Nasdaq (^IXIC) advanced 0.36%, or 25.16 points.

Brexit remains in focus Wednesday after May suffered a massive defeat on her EU divorce deal Tuesday. The deal, struck down in a 432 to 202 vote, prompted a no-confidence motion from the opposition Labour Party and assertions from the EU’s chief Brexit negotiator that the bloc would be willing to re-open talks regarding its future relationship with the UK. May’s defeat also means the Bank of England will likely delay its next interest rate hike until the future path for Brexit is more clearly understood.

May’s government faces a vote of no confidence expected to begin at 2 p.m. ET. Markets are pricing in an outcome that the current government will be safe, as reflected in the pound’s overnight rebound. May must pick from a host of potential paths forward, assuming her government survives Wednesday’s vote, including returning to the EU to try and work out a more popular deal, requesting an extension on the current March 29 deadline to leave the EU or having the U.K. departing without a plan. The potentially disastrous “no-deal” departure is among the most concerning to businesses, which have begun to stock up on goods ahead of anticipated political dysfunction.

Elsewhere, Asian equities got a boost after China’s central bank on Wednesday injected $83 billion into the country’s financial system in a move to add stimulus to the cooling, trade war-battered economy. This comes the day after the People’s Bank of China said it planned to cut taxes, increase spending and provide other measures intended to support the economy.

Corporate earnings

In the U.S., corporate earnings season is accelerating, with a slew of financial institutions reporting quarterly results on Wednesday. Bank of America (BAC) beat Wall Street’s expectations on the top and bottom lines and tripled its quarterly profit to $7.3 billion on strength in its consumer-banking business. Goldman Sachs (GS) exceeded profit expectations due in large part better-than-anticipated performance in its investment banking division.

__

whatever you say emily!

https://finance.yahoo.com/news/stocks-push-higher-goldman-sachs-bofa-report-strong-results-134105151.html

>>4777033

I see krassentwats came back lb

they should report the penny stock pumper.

so worried about it then by all means report the anon doing that.