Bank of America, SunTrust Profits Surge
Monday April 18, 11:17 AM EDT
By Jonathan Stempel
NEW YORK (Reuters) - Bank of America Corp. (BAC) and SunTrust Banks Inc. (STI), two of the largest U.S. banks, on Monday reported big increases in quarterly profit, fueled by increased borrowing, cost controls and acquisitions.
Bank of America, the No. 3 bank, said profit surged 75 percent to a record, while SunTrust, the seventh-largest, reported a 36 percent increase. Earnings of both companies topped Wall Street estimates, and their shares rose. Bank of America shares were up 0.8 percent, and SunTrust shares gained 0.4 percent in morning trade.
Five of the 10 largest U.S. banks have reported an average 33 percent increase in first-quarter profits, helped by mergers. Four of the five beat Wall Street forecasts, including Citigroup Inc. (C) and Wachovia Corp. (WB).
Wells Fargo & Co. (WFC), U.S. Bancorp (USB) and National City Corp. (NCC) report on Tuesday, and J.P. Morgan Chase & Co. (JPM) and Bank of New York Co. (BK) on Wednesday.
Charlotte, North Carolina-based Bank of America said net income rose to $4.7 billion, or $1.14 per share, from $2.68 billion, or 91 cents per share, a year earlier.
Excluding merger charges, profit was $1.16 per share. Results included $659 million of gains on the sale of debt securities. Trading profit more than doubled to $704 million.
Analysts polled by Reuters Estimates on average expected a profit of 97 cents per share.
"It was an excellent quarter," said Stephen Berman, a portfolio manager at Stein Roe Investment Counsel in New York. "They had respectable growth in revenue and net interest income, and had very good trading results."
Revenue increased 47 percent to $14.22 billion, topping analyst forecasts for $13.79 billion.
Lending income increased 35 percent and fee income jumped 65 percent, while expenses rose just 30 percent. Compared with the fourth quarter, lending and fee income increased, and expenses fell.
"We saw the strongest commercial loan growth in many quarters across our company and deposit growth continues to be robust," Chief Executive Kenneth Lewis said in a statement.
Bank of America added a net 759,000 savings and 610,000 checking accounts, both records, and 1.34 million credit card accounts. It ended the quarter with $1.21 trillion of assets.
The quarter was the last when year-earlier comparisons won't include results from FleetBoston Financial Corp., which Bank of America bought in April 2004 for $48 billion.
Merger-related savings totaled $437 million, and Bank of America eliminated about 1,000 jobs in the quarter.
Sherri
Piedmont, California
U.S.A.