TheChek News Flow

Reports Q4 (Dec) earnings of $0.32 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.31; revenues fell 12.7% year/year to $20.15 bln vs the $21.01 bln consensus.

• Results for the most recent quarter exclude three adjustments that, in aggregate, reduced revenue in the fourth quarter of 2014 by $1.2 billion (pretax) and lowered earnings per share by $0.07. These adjustments were:
• • $578 million negative market-related net interest income (NII) adjustment, driven by the acceleration of bond premium amortization on the company's debt securities portfolio due to lower long-term interest rates;
  • One-time transitional charge of $497 million related to the adoption of funding valuation adjustments on uncollateralized derivatives i
  • $129 million in net DVA losses related to a tightening of the company's credit spreads.
• Net interest income, on an FTE basis, was $9.9 billion in the fourth quarter of 2014, down $1.1 billion from the year-ago quarter. The decline was driven by a $788 million negative swing year-over-year in market-related adjustments as discussed above, and lower loan balances and yields.
• Consumer and Business Banking reported net income of $1.8 billion, compared to $2.0 billion in the year-ago quarter. The decline was driven by higher provision for credit losses as a result of the slowing pace of improvements in credit quality.
• The company originated $11.6 billion in first-lien residential mortgage loans and $3.4 billion in home equity lines during the fourth quarter of 2014, compared to $11.7 billion and $3.2 billion in the prior quarter.
• Global Wealth and Investment Management reported net income of $706 million, compared to $778 million in the fourth quarter of 2013. Revenue increased 3 percent from the year-ago quarter to $4.6 billion, driven by higher noninterest income with record asset management fees, partially offset by lower transactional activity.
• Global Banking reported net income of $1.4 billion in the fourth quarter of 2014, up $178 million, or 14 percent, from the year-ago quarter, driven by a reduction in the provision for credit losses and a decline in noninterest expense partly offset by lower revenue. Revenue of $4.1 billion declined 6 percent from the year-ago quarter, reflecting lower investment banking fees and net interest income.
• • Equities sales and trading revenue, excluding net DVA/FVA, was up modestly from the fourth quarter of 2013 to $911 million despite a challenging market environment.

Capital

• The common equity tier 1 capital ratio under the Basel 3 was 12.3 percent at December 31, 2014 and 12.0 percent at September 30, 2014. The estimated common equity tier 1 capital ratio under the Basel 3 Advanced approaches was 9.6 percent at both December 31, 2014 and September 30, 2014.
• The estimated supplementary leverage ratio (SLR) for the Bank Holding Company was approximately 5.9 percent.
• Tangible book value per share of common stock was $14.43 at December 31, 2014, compared to $13.79 at December 31, 2013. Book value per share was $21.32 at December 31, 2014, compared to $20.71 at December 31, 2013.