Upcoming AWS Coverage on Mitsubishi UFJ Financial Group

LONDON, UK / ACCESSWIRE / April 20, 2017 / Active Wall St. announces its post-earnings coverage on Bank of America Corp. (NYSE: BAC). The Company reported its first quarter fiscal 2017 results on April 18, 2017. The second-largest US bank surpassed earnings estimates. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Bank of America's competitors within the Money Center Banks space, Mitsubishi UFJ Financial Group Inc. (NYSE: MTU), is estimated to report earnings on May 15, 2017. AWS will be initiating a research report on Mitsubishi UFJ Financial following the release of the next earnings results.

Today, AWS is promoting its earnings coverage on BAC; touching on MTU. Get our free coverage by signing up to: http://www.activewallst.com/register/.

Earnings Reviewed

For the three months ended March 31, 2017, Bank of America's revenue, net of interest expense, increased 7% to $22.2 billion compared to $20.8 billion in Q1 2016. Sales and trading revenue grew 13% to $3.9 billion. Excluding net debit valuation adjustments (DVA), sales and trading revenue increased 23% to $4.0 billion. The Company's net investment banking fees rose 37% to $1.6 billion.

For Q1 2017, On an average basis, Bank of America's total loans were up $21 billion, or 2%, to $914 billion. Loan growth in the Company's business segments were up $44 billion, or 6%, to $819 billion, with Consumer banking leading with 8% growth. Bank of America reported 7% y-o-y growth in wealth management, driven by residential mortgages. Global Banking loans were up 4% y-o-y to $343 billion. Loans in commercial business grew 6% y-o-y, despite a slight reduction in commercial real estate.

For Q1 2017, Bank of America's total net charge-offs of $934 million, or 42 basis points, on average loans increased slightly from Q4 2016 due to expected seasonality in the Company's credit card products but were down 13% from Q1 2016. The Company's provision expense of $835 million rose $61 million from Q4 but was down $162 million from Q1 2016. Net reserve releases in the quarter of $99 million remained consistent with Q4 and the year ago quarter.

For Q1 2017, Bank of America's non-interest expense was $14.8 billion. The group's efficiency ratio improved 400 basis points y-o-y. The provision for credit losses fell by 16% to $835 million.

For Q1 2017, Bank of America's net income surged 40% to $4.9 billion, driven by 700 basis points of operating leverage, while its earnings per share grew 46% to $0.41 compared to net income of $3.5 billion and $0.28 per share in the year ago period. The Company's earnings numbers exceeded Wall Street's estimates of $0.35 per share.

Segment Results

During Q1 2017, Bank of America's Consumer banking segment produced earnings of $1.89 billion up 7% y-o-y and returning 21% on allocated capital. The Company noted that the 21% return is on $37 billion of allocated capital, which is an increase of $3 billion in the reported quarter, given growth in their loans and deposits. The segment's y-o-y average loans grew 8%, average deposits grew 10%, and Merrill Edge brokers assets grew 21%; driving revenue growth of 5% led by a 9% increase in net interest income compared to Q1 2016. For Q1 2017, Consumer banking efficiency ratio improved nearly 500 basis points to 53%. Cost reductions also helped drive the cost of deposits down 10 basis points on a y-o-y basis. Consumer banking credit quality remained solid with the net charge-off ratio declining 4 basis points to 121 basis points.

Consumer vehicle lending remains solid, up 12% y-o-y. US consumer card average balances grew 3% year-over-year, and spending on the Company's credit cards was up 8% compared to Q1 2016.

During the reported quarter, the Company's global wealth and investment management segment recorded earnings of $770 million and record pre-tax offering margin of 27%, while returning 22% on allocated capital.

For Q1 2017, the segment's net interest income rose 3%, driven by loan growth. The segment's non-interest income also rose 3% on a y-o-y basis as 8% higher asset management fees were partially offset by lower transactional revenue. Total revenue grew 3% while expenses grew 2% creating important but modest operating leverage. The segment witnessed $29 billion of long-term AUM flows this quarter reflecting strong client activity, as well as the continuing shift from IRA brokerage to AUM. Client balances climbed to nearly $2.6 trillion driven by market values, solid long-term AUM flows, and continued loan growth. Average deposits of $257 billion were flat compared to Q4, while ending deposits were down, primarily reflecting some movement to investment assets. Average loans of $148 billion were up 7% y-o-y.

Bank of America's Global banking segment reported record revenue of $5.0 billion up 11% on a y-o-y basis led by investment banking activity. Revenue growth coupled with expense management, improved the efficiency ratio 500 basis points to 44%. In addition, provision expense of $17 million in Q1 2017 was more closely aligned with charge-offs, while Q1 2016 included approximately $500 million in reserve increases for energy exposure. This resulted in a 58% y-o-y improvement in earnings to $1.7 billion. Global banking continues to drive loan growth within its risk and client frameworks, albeit at a slower pace. Total investment banking fees for the Company were $1.6 billion which was up 37% from Q1 2016. Return on allocated capital increased to 18% despite adding $3 billion of allocated capital this quarter.

During Q1 2017, Bank of America's global markets segment earned $1.3 billion and returned of 15% on allocated capital. This includes a reduction of capital of $2 billion. Excluding litigation, y-o-y expenses were up 2% while revenue grew 19%. Sales and trading revenue of $4 billion, excluding net DVA, was up 23% from Q1 2016. Excluding net DVA and versus Q1 2016, FICC sales and trading of $2.9 billion increased 29%. Within FICC, the y-o-y improvement was driven by improved client activity and corporate credit and mortgage products. Equity sales and trading was up 7% y-o-y to $1.1 billion.

Balance Sheet

For Q1 2017, Bank of America's common equity increased $1.3 billion compared to Q4 as $4.4 billion in net income available to common was reduced by $3 billion and capital returned to shareholders through dividends and net share repurchases. The Company's book value per share rose 5% from Q1 2016 to $24.36.

Bank of America's CET1 transition ratio under Basel III ended the quarter at 11%. On a fully phased-in basis, compared to Q4, the CET1 ratio improved 20 basis points to 11%. CET1 capital increased $1.6 billion to $164 billion, driven by earnings and the utilization of deferred tax assets offset by return of capital.

Stock Performance

On Wednesday, April 19, 2017, Bank of America's share price finished yesterday's trading session at $22.74, slightly up 0.13%. A total volume of 101.50 million shares exchanged hands, which was higher than the 3 months average volume of 95.48 million shares. The stock has advanced 42.64% and 59.71% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 3.21%. The stock is trading at a PE ratio of 15.22 and has a dividend yield of 1.32%.

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