Some of the biggest U.S. banks reported a mixed bag of results on Wednesday, as efforts to repay government bailout money and loan losses continued to weigh on results.
Bank of America Corp., Morgan Stanley Inc., Bank of New York Mellon and Wells Fargo released fourth-quarter earnings.
The lenders were all recipients of taxpayer bailout money under the Troubled Asset Relief Programme as the U.S. government sought to stem a meltdown of the financial system following the collapse of investment bank Lehman Brothers. Bank of America, the biggest U.S. lender, reported a wider-than-expected $5.2 billion quarterly loss, after it took a charge of $5 billion, including preferred stock dividends, from repaying the government.
The Charlotte, North Carolina-based bank also made a provision of $10.1 billion against potential credit losses, but that figure was down 14% from the previous quarter, leading the lender to say its credit problems are stabilizing.
Bank of America bought Merrill Lynch in part of a wave of consolidation that followed the crash. The Merrill acquisition bolstered the global wealth and investment management unit, which saw net income rise by $816 million to $1.3 billion.
Morgan Stanley’s profit in the quarter also missed expectations on weaker trading results.
Morgan Stanley reported a quarterly net income of $413 million, or 29 cents a share, compared with a loss of $10.5 billion, or $11.35 a share, in the year-earlier quarter.
Trading revenue dropped 65% to $1.1 billion in the fourth quarter from $3.2 billion in the third quarter.
One bright spot for the bank was the investment banking division. Underwriting revenue came in at $950 million compared with $245 million a year earlier boosted by mergers and acquisitions business.
Morgan Stanley said it’s seeing momentum across all of its businesses and predicted that 2010 will be a year of "continued improvement."
Wells Fargo's results topped analysts' expectations. The company swung to a profit of $2.82 billion, or 8 cents a share, compared with a year-earlier loss of $2.73 billion, or 84 cents a share.
It said its earnings were reduced by 47 cents for TARP-related preferred-stock dividends in the quarter. And it also had to make further provisions against loan losses.
Bank of New York Mellon said earnings rose on increased assets under custody and administration.
BNY Mellon, one of the world's largest custody banks, said earnings from continuing operations jumped to $712 million, or 59 cents a share, from $50 million, or 4 cents a share, a year earlier.
The bank’s results were boosted by a tax benefit that may be hard to reproduce in future quarter, analysts said.
