PLUMMETING costs sent profits soaring in the first quarter at Bank of America Merrill Lynch (BoAML) as a major programme of spending cuts kicked in, the bank revealed yesterday.
Profits came in at $2.6bn (£1.7bn), more than three times the $653m net income in the same quarter of 2012.
Revenues increased five per cent to $23.7bn while non-interest expenses fell 5.6 per cent to $18.1bn.
Investment banking improvements were key to the gain in profits, rising 26 per cent to $1.5bn.
Investment and brokerage services also saw an improvement of 5.3 per cent to $3bn while trading account profits climbed 44 per cent to $3bn.
Mortgage origination increased 57 per cent on the year to $24bn, while commercial loan balances rose 17 per cent to $367bn.
Personnel expenses fell three per cent on the year to $9.9bn as the number of full time equivalent employees fell almost 16,000 to 262,812.
The bank has also been cutting down on spare capacity, cutting down its US branches from 5,651 a year ago to 5,389 now and chopping 5.5 per cent of its US cash points.
Provisions for credit losses also came down sharply, falling 29 per cent to $1.7bn in the three-month period.
“There were many examples of progress this quarter,” said chief financial officer Bruce Thompson.
“We reduced non-interest expense by nearly $1bn year-over-year, and credit costs continued to decline. Our relentless focus on capital, liquidity, and expense reduction enables us to be in position to return excess capital to investors through the previously announced common stock repurchase program and preferred stock redemptions.”
But the first quarter results failed to meet market expectations and shares fell 6.35 per cent.