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Bank Of America Surges As Market Ignores Latest FICC Miss

Benefit of the doubt?

Ok, so Wall Street is 0-3 on the FICC front.

Hot on the heels of Citi’s FICC fumble on Monday and JPMorgan’s similar whiff on Tuesday, FICC trading at Bank of America fell 15% in Q4. That looks like it was well worse than what folks were expecting. Consensus was looking for $1.64 billion and the actual number was $1.4 billion. BofA blames it on lackluster client activity and, predictably, weak credit markets.

Equities trading jumped 11%, but it’s not clear that’s as profitable a business for them. All in all, it looks like the trading results were generally on par with what was expected, which probably helps explain why the shares responded positively after the results hit, in stark contrast to what we saw in the knee-jerk following Citi and JPM’s numbers earlier this week.

Of course BofA doesn’t depend as much on FICC trading — they’ve obviously got the consumer franchise which comprises a sizable percentage of overall revenue.

IB revenue on the whole beat ($1.3 billion versus est. $1.23 billion) but was down 5%.

The top line beat estimates ($22.7 billion versus est. $22.35 billion) and the bottom line (EPS $0.70) was also a beat. It’s worth noting that the net income growth number is absurdly misleading. To wit:

Net income of $7.3 billion rose 208%.

No, it did not. I mean, it did. But that figure is 39% once you adjust for the impact of the Tax Act.

The falling non-interest expense headline is probably good news, which is presumably why they tout it on the second slide in the deck (embedded below). Credit loss provisions fell $96 million to $905 million.

Amusingly, the shares are up sharply in the premarket. We’ll see if that’s a contrarian indicator. After all, Citi and JPMorgan dipped after their results only to rally later.

BAC

(Bloomberg)

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