Bank of America Corp yesterday posted a quarterly shareholder profit of $2.22bn, reversing a year-earlier loss, as fewer loans went bad.
The bank’s loan portfolio performed better, but results deteriorated in three of its five major businesses – consumer real estate, commercial and investment banking, and sales and trading.
Chief executive Brian Moynihan has been struggling to put the bank’s legal problems behind it and start building revenue. Excluding gains and losses from changes in the value of the bank’s debt, revenue in the third quarter fell 1.5% to $22.19bn.
The second-largest US bank earned 20 cents per share, beating analysts’ average estimate of 18 cents, according to Thomson Reuters I/B/E/S.
In the year-earlier quarter, the bank recorded a net loss attributable to common shareholders of $33mn due to accounting adjustments, litigation expenses and tax charges.
In the latest quarter the bank was helped by the improved performance of its loan portfolio. It wrote off $1.69bn of loans, down from $4.12bn a year earlier.
With loans performing better and delinquencies falling across all consumer portfolios, Bank of America set aside $296mn to cover bad loans, compared with $1.77bn in the same quarter last year.
Sales and trading revenue for the bank’s fixed income, currency and commodities business, excluding an accounting adjustment, fell by $501mn to $2.0bn due to lower bond-trading volumes for much of the quarter.
Fixed-income traders were inactive for several weeks leading up to the Federal Reserve’s meeting in mid-September in the expectation that the central bank would announce that it was starting to wind down its bond-buying stimulus programme.
Bank of America sold its remaining stake in China Construction Bank Corp for $1.47bn in September, contributing $750mn pre-tax to the bottom line.
Abbott Laboratories reported higher-than-expected quarterly earnings yesterday, helped by strong demand for its diagnostics, and boosted its quarterly dividend by more than 50%.
Lower taxes and cost-cutting also helped Abbott beat earnings forecasts, analysts said. The company’s shares jumped 4.5% in early trading to $35.23.
“The 57% dividend hike is the big news,” Jefferies analyst Jeffrey Holford said in a research note. Abbott said it would boost its dividend to 22 cents per share from 14 cents, starting with the Feb. 15 payment.
Abbott, which spun off its branded prescription drugs business in January into a separate publicly traded company called AbbVie Inc, reported third-quarter earnings from continuing operations of $773mn, or 49 cents per share, up from $339mn, or 21 cents per share, a year earlier.
Excluding special items, Abbott earned 55 cents per share.
Analysts, on average, had expected 51 cents.
Global company revenue rose 2% to $5.37bn, a bit shy of Wall Street forecasts for $5.39bn. Sales would have risen 4.3% if not for the stronger dollar, which lowers the value of sales in overseas markets.
Despite beating earnings forecasts, Abbott left its full-year profit view unchanged at $1.98 to $2.04 per share, excluding special items.
“They’re guiding conservatively given the current general macroeconomic situation,” said Edward Jones analyst Jeff Windau, who has a “buy” rating on Abbott. “The quarter highlights overall strength of the company, including its strong medical device business and its international presence, including growth in emerging markets.”
BlackRock Inc, the world’s largest money manager, said yesterday its third-quarter profit rose 15%, boosted by strong investor demand for the company’s iShares and retail business.
The New York-based asset manager on Wednesday reported net income of $730mn, or $4.21 per share, up from $642mn, or $3.65 per share, a year earlier.
Excluding certain items such as compensation expense, earnings were $3.88 a share, in line with the analysts’ average forecast, according to Thomson Reuters I/B/E/S.
Roughly 80% of the $25.3bn investors poured into long-term funds went into the company’s iShares business, which had $20.3bn of net inflows during the quarter.
“You’re seeing more and more ETF utilisation across the globe as a tool for portfolio composition and as a tool for portfolio liquidity,” chief executive officer Laurence Fink said in an interview yesterday.
BlackRock’s iShares business, which it acquired from Barclays in 2009 and is the largest US provider of exchange-traded funds, now accounts for roughly 23% of BlackRock’s total assets under management.
Earlier this year, the company completed its acquisition of Credit Suisse’s exchange-traded funds business and expanded its three-year relationship with Fidelity Investments, which now promotes 65 iShares ETFs to its clients without charging a commission. Previously, BlackRock paid Fidelity to list just 30 such funds.
Clients gave their brokers and bankers at Merrill Lynch Wealth Management and US Trust more money to manage in the third quarter, but revenue at the main wealth businesses of Bank of America Corp fell from the second quarter on reduced trading activity and seasonal lassitude, the bank said yesterday.
Revenue at Merrill Lynch fell 2.6% from the second quarter, but was up 6.6% to $3.6bn from a year earlier. Merrill ended the quarter with just over 14,000 brokers, down 133 from the end of June, primarily due to attrition of trainees who were not meeting their targets, a spokeswoman said in an email.
She said that turnover among Merrill’s most productive brokers, or the top two quintiles, was “at historically low levels.”
Revenue at US Trust, the private banking unit for high-net-worth clients, rose 11.3% to $74mn from a year earlier but was down from the previous quarter.
The results track recent wealth management trends in which rising markets and aggressive efforts to collect fee-generating assets have raised client balances even as customer confidence in the markets remains cautious. Merrill clients ended the quarter with $1.85tn in their accounts, up 3% from a year earlier. That is the highest level since Bank of America bought the brokerage firm in January 2009.
Mattel Inc topped Wall Street’s profit estimates for the third quarter, benefiting from strong demand for its chubby-faced American Girl dolls and its Monster High line depicting the teen descendants of famous monsters.
The toy company, the world’s largest, also said yesterday that it would pay a cash dividend of 36 cents a share in the current quarter, bringing the total for the year up 16% from the 2012 payout.
The news comes as manufacturers and retailers gear up for the holiday season, the biggest selling period of the year. Rival Hasbro Inc is due to report its quarterly results next week.
Mattel, also home to brands such as Hot Wheels and Fisher-Price, said third-quarter net income rose to $422.8mn, or $1.21 a share, from $365.9mn, or $1.04 a share, a year earlier.
Analysts on average expected a profit of $1.12 a share, according to Thomson Reuters I/B/E/S.
Sales rose 6% to $2.21bn, beating the analysts’ average estimate of $2.17bn.
Total Barbie shipments rose 11.1% in the third quarter from a year earlier, according to figures that supply-chain data company Panjiva pulled for Reuters.
Barbie sales increased 3%, after posting declines in the previous four quarters. The iconic doll, which was launched more than 50 years ago, had been overshadowed by the Monster High dolls.
BNY Mellon Corp yesterday reported a higher-than-expected quarterly profit on rising fees from managing money, increased mutual fund balances and strength in foreign currency trading.
The world’s largest custody bank by assets earned $967mn, or 82 cents a share, in the third quarter, compared with $720mn, or 61 cents a share, a year earlier.
But without a benefit from a US Tax Court decision, BNY Mellon said earnings were 60 cents a share. That beat the analysts’ average estimate of 58 cents, according to Thomson Reuters I/B/E/S.
Investment services fees rose 4% to $1.7bn, partly reflecting higher mutual fund and asset-based fees.
Meanwhile, investment management and performance fees rose 5% from year-earlier levels to $821mn. The gains reflected new business and a rising stock market in the third quarter.
Foreign exchange revenue surged 27% to $154mn on higher volumes and volatility.
ASML, the world’s leading provider of tools for making computer chips, expects first-half sales in 2014 to be on a par with those in the second half of this year, driven by demand for smartphones and tablet computers.
The Dutch firm is seen as a barometer for the health of Europe’s technology sector, and its upbeat outlook suggests manufacturers are betting on continued consumer appetite for the latest mobile gadgets.
“We expect the first half of 2014 will be good,” chief executive Peter Wennink said in a webcast interview. “The mobile revolution is still ongoing.”
ASML said it sees first-half sales in 2014 at similar levels to the second half of this year – which would translate into sales of about €3.12bn ($4.21bn) if the company meets its full-year sales forecast of €5.2bn in 2013.
ASML reported third-quarter net profit of €193mn on sales of €1.318bn, in line with forecasts and driven by demand from logic customers which make microprocessors used in computers and mobile devices, and from DRAM – or Dynamic Random Access Memory – customers for mobile devices such as tablet computers and smartphones.
Analysts in a Reuters poll had forecast a third-quarter net profit of €197mn on sales of €1.337bn.
It reiterated its full-year outlook for sales of €5.2bn which include a contribution from its acquisition of Cymer last year.
Charles Schwab Corp, a US discount broker, posted its highest quarterly profit since the financial crisis on Tuesday as the rising US stock market fuelled more customer trading. The broker’s shares rose as much as 8.1%.
Schwab’s third-quarter revenue of $1.37bn was its best since the height of the Internet bubble more than a decade ago. The company offered a rosy outlook, helped by higher revenue and tamped-down expenses.
The rising US stock market also helped the company. With the Federal Reserve unlikely to scale back its bond-buying stimulus program, the stock market has been jumping.
Schwab said it benefited from the economic recovery, but also from winning more assets from clients. In the traditionally slow summer quarter, it gained $43bn in net new assets, 97% higher than a year earlier.
Schwab is selling more services to clients this year. It historically focused on serving individual investors making their own investment choices, but is now also offering advice for a fee. The company said $1tn of its $2.15tn of client assets were enrolled in some form of advice programme.
Schwab said third-quarter profit rose 17% from a year earlier to $290mn. Earnings per share of 22 cents beat analysts’ average estimate of 20 cents, according to Thomson Reuters I/B/E/S.
Schwab’s third-quarter revenue was the highest in more than a decade, even though historically low interest rates have weighed on its money market funds.
The company said it expects revenue to rise 3% to 5% faster than expenses in 2014, a sign that the retail brokerage giant is taming costs and continues to collect assets from clients at a strong pace.
Yahoo on Tuesday took attention off a lacklustre quarterly report with word that it plans to hold onto a larger chunk than originally planned of Chinese e-commerce powerhouse Alibaba.
The California-based Internet pioneer that has been struggling for years to reinvent itself after withering in Google shadow said that its profit in the recently-ended quarter slipped from the same period a year ago, when its coffers were swelled by the sale of shares in China’s Alibaba.
Yahoo reported earnings of $297mn on revenue of $1.139bn in the quarter that ended September 30. The profit was a steep drop from what was posted in the same period last year, when Yahoo sold part of its stake in the Chinese e-commerce giant.
“I’m very pleased with our execution, especially as we’ve continued to invest in and strengthen our core business,” said Yahoo chief Marissa Mayer. “Now with more than 800mn monthly users on Yahoo—up 20% over the past 15 months—we’re achieving meaningful increases in user engagement and traffic.”
The earnings figures, which topped Wall Street expectations but showed that Mayer has yet to rev up the company’s revenues, were released along with word that the California company would keep a larger portion of Alibaba under an amended agreement with the Chinese Internet retail titan.
“They beat the street on earnings but revenue is down,” said independent analyst Rob Enderle or Enderle Group in Silicon Valley.
Word that Yahoo would hold onto more of its Alibaba shares appeared to buoy the Internet pioneer’s stock price, which dipped nearly two% to $33.38 by the close of trading but climbed back to $33.71 after hours.
Yahoo said in a statement it would sell 208mn Alibaba shares, instead of a previously agreed 261.5mn shares as the Chinese firm prepares a public offering.
Intel, the world’s biggest computer chipmaker, said Tuesday its quarterly profit dipped 0.7% from a year ago to $2.95bn, but managed to beat Wall Street estimates.
Intel, which is struggling to make inroads in the surging market for processors for smartphones and tablets in a rapidly shifting tech landscape, said revenues for the third quarter were up a scant 0.2% at $13.48bn.
The profit translated to 58 cents a share, or five cents better than the Wall Street consensus.
“The third quarter came in as expected, with modest growth in a tough environment,” said Intel chief executive Brian Krzanich.
“We’re executing on our strategy to offer an increasingly broad and diverse product portfolio that spans key growth segments, operating systems and form factors. Since August, we have introduced more than 40 new products for market segments from the Internet-of-Things to data centres, with an increasing focus on ultra-mobile devices and 2 in 1 systems.”
Krzanich, who was named chief executive in May, has said Intel would step up efforts to gain ground in the mobile market.
PepsiCo Inc reported higher quarterly earnings yesterday and said it was on track to meet its financial goals for the year, despite a sluggish economy.
The maker of Pepsi-Cola, Frito-Lay snacks and Tropicana juice said net income was $1.91bn, or $1.23 per share, in the third quarter, up less than 1% from $1.90bn, or $1.21 per share, a year earlier.
Excluding items, earnings were $1.24 per share. On that basis, analysts were expecting $1.17, according to Thomson Reuters I/B/E/S.
Speaking on Bloomberg Television on Tuesday morning, PepsiCo chief financial officer Hugh Johnston said the company had delivered a “good quarter” and that its global beverage business was “largely in line with what the competition was doing.”
“We think that’s enough to satisfy the broader investor base,” Johnston said, adding that PepsiCo had raised prices by about 3% in the last quarter so that it could reinvest the money in its brands and innovation.
PepsiCo has been under pressure from activist shareholder Nelson Peltz since July, when he said publicly that the company should buy Oreo cookie maker Mondelez International and split off its soft-drink business.
Net revenue rose 1.5% to $16.91bn.