BofA’s Moynihan Says Traders Profited Most Days in Quarter

Jan 21, 2014 1:52 pm ET

(Updates with CEO comment on litigation in last paragraph. Click DAVOS <GO> for more on the World Economic Forum.)

Jan. 21 (Bloomberg) -- Bank of America Corp. Chief Executive Officer Brian T. Moynihan said trading operations were profitable almost every day last quarter as the lender helped clients adjust to the prospect of higher interest rates.

“I think we made money on every trading day except for two or three,” Moynihan said today during a Bloomberg Television interview in Davos, Switzerland, with Erik Schatzker and Stephanie Ruhle. “Quarter after quarter, that’s been true. It’s because it’s a client business.”

Bank of America, the second-biggest U.S. lender, is trading near a three-year high after reporting last week that fourth- quarter profit quadrupled. The company posted a 19 percent jump in trading revenue in the period, making it the only major U.S. investment bank to report an increase.

The firm posted two days of losses in the third quarter of 2013, after seven days in the first half of the year. Official results for the last three months are usually disclosed in the company’s 10-K annual report, typically filed in late February.

Moynihan, 54, has spent his four years atop Charlotte, North Carolina-based Bank of America resolving disputes tied to shoddy home loans and foreclosures, mostly from the 2008 takeover of Countrywide Financial Corp. that predated his tenure as CEO. The stock, which dropped 2 cents to $16.99 at 1:46 p.m. in New York, is the best performer in the KBW Bank Index for the past 12 months with a 52 percent advance.

Cleanup Continues

The firm has done substantial work to settle claims stemming from the financial crisis and has boosted compliance efforts to ensure mistakes don’t recur, he said today. Growth in the operating units is starting to show as the old disputes drop off, he said.

“As we continue the compliance and risk infrastructure that we’ve been building on and investing in heavily, I think that you won’t find those types of things repeat, but we are still in the process of cleaning it up,” he said.

Moynihan has spent more than $50 billion on mortgage and foreclosure claims and faces more demands that the firm atone for activities that contributed to the 2008 credit crisis. Bank of America may have to pay $5 billion to $8 billion to end a Federal Housing Finance Agency suit after JPMorgan Chase & Co.’s $4 billion accord set “a relatively high bar,” Fitch Ratings said in October.

FHFA Claims

The FHFA lawsuit cited about $57 billion of mortgage-backed securities from Bank of America, compared with about $33 billion in the JPMorgan case, Fitch said. Moynihan’s firm also faces a U.S. lawsuit for claims it misled investors over the quality of mortgages within an $850 million bond and said in October that the Justice Department may file another suit tied to home loans.

Moynihan affirmed today that the worst of the mortgage battles are behind the company.

“Starting in 2010 and 2011, we did a lot of work and it cost us a lot of money,” he said. “There are still uncertainties, we have investigations by the Department of Justice that we’ve talked about to people, and we will deal with those as they come up.”

--With assistance from Hugh Son in New York. Editors: Rick Green, Peter Eichenbaum