Bank of America logs a drop in net income at its GWIM unit, while revenue rises slightly.

Bank of America has today reported global wealth and investment management net income of $706 million for the fourth quarter of 2014, down from $813 million and $778 million in the previous quarter and year-ago, respectively.

However, GWIM revenue rose by 3 per cent from the year-ago quarter to $4.6 billion, which the US-listed bank said was driven by higher non-interest income along with record asset management fees (of $2.1 billion – up 16 per cent on the year-ago quarter) that were partially offset by lower transactional activity.

Client balances of $2.50 trillion were up by $36 billion, and, as a percentage of BoA Corporation, GWIM revenue increased to 24.3 per cent from 22 per cent in the third quarter of 2013, highlighting the growth of the wealth management business as an important part of the company.

It also grew its number of wealth advisors by 714 from the year-ago quarter to 17,231, while full-year attrition levels were at “historical lows” since the Merrill Lynch merger.

Meanwhile, Merrill Lynch Wealth Management posted client balance flows of $49 billion, which is a post-merger record and $22 billion more than in 2013. Client balances of over $2 trillion, up 5.3 per cent year-over-year, were also driven by market and long-term AuM flows. Additionally, financial advisor productivity is at a record level of $1.4 million per experienced advisor - a 3 per cent increase over the prior year - and record total advisor productivity at $1.1 million.

At US Trust, revenue of $3.1 billion is at its second-highest year to-date, slightly behind 2008.

Group results

Bank of America as a whole logged net income of $3.1 billion - or $0.25 per diluted share - for the fourth quarter of 2014, down slightly from $3.4 billion ($0.29 per diluted share) in the year-ago period. Meanwhile, revenue - net of interest expense - was $19.0 billion, compared to $21.7 billion in Q4 2013.

The bank said the results for the most recent quarter include three adjustments that, in aggregate, reduced revenue in Q4 2014 by $1.2 billion (pre-tax) and lowered earnings per share by $0.07.

These adjustments were a $578 million negative market-related net interest income adjustment; a one-time transitional charge of $497 million related to the adoption of funding valuation adjustments on uncollateralized derivatives in its global markets business; and $129 million in net DVA losses related to a tightening of its credit spreads.

“Approximately $720 million of the decline from the fourth quarter of 2013 was due to lower gains from the sales of debt securities and equity investment income, and the remainder was attributable to lower mortgage banking income and lower trading account profits,” BoA said.

“In 2014, we continued to invest in our businesses while reducing expenses and resolving our most significant litigation matters,” said chief executive Brian Moynihan. “Last quarter, consumer deposits and loan originations were solid; wealth management client balances grew to $2.5 trillion; we increased lending to middle-market and large companies; and we retained a leadership position in investment banking.”

Moyniham added: “There's more work and tremendous opportunity ahead as we improve on the platform we've built to serve our customers and clients, and we enter 2015 in good shape to manage both the opportunities and the challenges the markets and economy will offer.”