Bank of America 2010 Annual Report Download - page 51

Global Banking & Markets
(Dollars in millions) 2010 2009 % Change
Net interest income
(1)
$7,989 $ 9,553 (16)%
Noninterest income:
Service charges
2,126 2,044 4
Investment and brokerage services
2,441 2,662 (8)
Investment banking income
5,408 5,927 (9)
Trading account profits
9,689 11,803 (18)
All other income
845 634 33
Total noninterest income
20,509 23,070 (11)
Total revenue, net of interest expense
28,498 32,623 (13)
Provision for credit losses
(155) 1,998 (108)
Noninterest expense
18,038 15,921 13
Income before income taxes
10,615 14,704 (28)
Income tax expense
(1)
4,296 4,646 (8)
Net income $6,319 $ 10,058 (37)
Return on average equity
12.01% 20.32%
Return on average tangible shareholders’ equity
15.05 25.82
Efficiency ratio
(1)
63.30 48.80
Balance Sheet
Average
Total trading-related assets $499,433 $508,163 (2)%
Total loans and leases
98,604 110,811 (11)
Total market-based earning assets
504,360 481,376 5
Total earning assets
598,613 588,252 2
Total assets
758,958 778,870 (3)
Total deposits
109,792 104,868 5
Allocated equity
52,604 49,502 6
Year end
Total trading-related assets $413,563 $410,755 1%
Total loans and leases
100,010 95,930 4
Total market-based earning assets
416,174 404,315 3
Total earning assets
509,269 498,765 2
Total assets
655,535 649,876 1
Total deposits
111,447 102,093 9
Allocated equity
49,054 53,260 (8)
(1)
FTE basis
GBAM provides financial products, advisory services, financing, securities
clearing, settlement and custody services globally to our institutional investor
clients in support of their investing and trading activities. We also work with
our commercial and corporate clients to provide debt and equity underwriting
and distribution capabilities, merger-related and other advisory services, and
risk management products using interest rate, equity, credit, currency and
commodity derivatives, foreign exchange, fixed-income and mortgage-related
products. As a result of our market-making activities in these products, we
may be required to manage positions in government securities, equity and
equity-linked securities, high-grade and high-yield corporate debt securities,
commercial paper, MBS and asset-backed securities (ABS). Underwriting debt
and equity issuances, securities research and certain market-based activities
are executed through our global broker/dealer affiliates which are our primary
dealers in several countries. GBAM is a leader in the global distribution of
fixed-income, currency and energy commodity products and derivatives.
GBAM also has one of the largest equity trading operations in the world
and is a leader in the origination and distribution of equity and equity-related
products. Our corporate banking services provide a wide range of lending-
related products and services, integrated working capital management and
treasury solutions to clients through our network of offices and client rela-
tionship teams along with various product partners. Our corporate clients are
generally defined as companies with annual sales greater than $2 billion.
GBAM also includes the results of our merchant processing joint venture,
Banc of America Merchant Services, LLC.
In 2009, we entered into a joint venture agreement with First Data
Corporation (First Data) to form Banc of America Merchant Services, LLC.
The joint venture provides payment solutions, including credit, debit and
prepaid cards, and check and e-commerce payments to merchants ranging
from small businesses to corporate and commercial clients worldwide. In
addition to Bank of America and First Data, the remaining stake was initially
held by a third party. During 2010, the third party sold its interest to the joint
venture, thus increasing the Corporation’s ownership interest in the joint
venture to 49 percent. For additional information on the joint venture agree-
ment, see Note 5 – Securities to the Consolidated Financial Statements.
Net income decreased $3.7 billion to $6.3 billion due to a $4.1 billion
decline in revenues and an increase in noninterest expenses of $2.1 billion.
This was partially offset by lower provision expense reflecting improvement in
borrower credit profiles. Additionally, income tax expense was negatively
affected from a change in the U.K. corporate income tax rate that impacted
the carrying value of the deferred tax asset by approximately $390 million.
Net interest income decreased $1.6 billion to $8.0 billion due to tighter
spreads on trading related assets and lower average loan and lease balances,
partially offset by higher earned spreads on deposits. The $12.2 billion, or
11 percent, decline in average loans and leases was driven by reduced client
demand. Net interest income is comprised of both markets-based revenue
Bank of America 2010 49