Bank of America reports sharp rise in profits for Q1 2013 after cost cutting

Bank of America has reported a sharp rise in profits for the first quarter of 2013 after it shed costs and set aside less money for bad loans.

Bank of America reported a net income of $2.3 billion in Q1 2013, after making $328 million in the last year’s same quarter.

Over the year the company has taken costs of $1 billion out of the bank, helped by 16,000 job cuts.

Also helping was a fall in the amount the bank set aside for bad debts – provisions were $1.7 billion, about a third lower than last year’s figure.

Bank of America is the latest US bank to report higher first quarter profits, with some having made record earnings.

Investment banking helped JP Morgan and Goldman Sachs, while Citigroup and JP Morgan, in common with Bank of America, both cut loan reserves.

Cost cutting was another common theme among the big banks.

Bank of America itself plans to have lowered costs by $8 billion by 2015, and it said another $1.5 billion of cost cuts would be in place by the end of 2013.

Leaving the one-off gains aside, Bank of America’s income from mortgages and income from trading in the fixed income, currency and commodities markets were both lower.

The weaker underlying performance sent the company’s shares lower on Wednesday, ending down 4.7%.

The bank’s chief executive, Brian Moynihan, said he was pleased with its performance: “Our strategy of connecting our customers to all we can do for them is working.”

Bank of America, along with two of its big four rivals, also pointed to income from investment banking as a positive contribution to earnings.

Brian Moynihan added: “Solid increases in loan growth to small businesses and middle-market companies, four straight quarters of steady growth in mortgage originations, record earnings in wealth management, and another quarter near the top in investment banking fees show we are balanced, focused and moving forward.”

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