Bank of America 2014 Annual Report Download - page 45

Bank of America 2014 43
Global Markets
(Dollars in millions) 2014 2013 % Change
Net interest income (FTE basis) $ 3,986 $ 4,224 (6)%
Noninterest income:
Investment and brokerage services 2,163 2,046 6
Investment banking fees 2,743 2,724 1
Trading account profits 5,997 6,734 (11)
All other income (loss) 1,230 (338) n/m
Total noninterest income 12,133 11,166 9
Total revenue, net of interest expense (FTE basis) 16,119 15,390 5
Provision for credit losses 110 140 (21)
Noninterest expense 11,771 11,996 (2)
Income before income taxes (FTE basis) 4,238 3,254 30
Income tax expense (FTE basis) 1,519 2,101 (28)
Net income $ 2,719 $ 1,153 136
Return on average allocated capital 8% 4%
Efficiency ratio (FTE basis) 73.03 77.94
Balance Sheet
Average
Total trading-related assets (1) $ 449,814 $ 468,934 (4)
Total loans and leases 62,064 60,057 3
Total earning assets (1) 461,179 481,433 (4)
Total assets 607,538 632,681 (4)
Allocated capital 34,000 30,000 13
Year end
Total trading-related assets (1) $ 418,860 $ 411,080 2
Total loans and leases 59,388 67,381 (12)
Total earning assets (1) 421,799 432,807 (3)
Total assets 579,514 575,472 1
(1) Trading-related assets include derivative assets, which are considered non-earning assets.
n/m = not meaningful
Global Markets offers sales and trading services, including
research, to institutional clients across fixed-income, credit,
currency, commodity and equity businesses. Global Markets
product coverage includes securities and derivative products in
both the primary and secondary markets. Global Markets provides
market-making, 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 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 risk in a broad range of
financial products including government securities, equity and
equity-linked securities, high-grade and high-yield corporate debt
securities, syndicated loans, MBS, commodities and asset-backed
securities (ABS). In addition, the economics of most investment
banking and underwriting activities are shared primarily between
Global Markets and Global Banking based on the activities
performed by each segment. Global Banking originates certain
deal-related transactions with our corporate and commercial
clients that are executed and distributed by Global Markets. For
more information on investment banking fees on a consolidated
basis, see page 42.
Net income for Global Markets increased $1.6 billion to $2.7
billion in 2014 compared to 2013. In 2014, we adopted a funding
valuation adjustment into our valuation estimates primarily to
include funding costs on uncollateralized derivatives and
derivatives where we are not permitted to use the collateral we
receive. This change in estimate resulted in a net FVA pretax charge
of $497 million. Excluding net DVA/FVA and charges in 2013
related to the U.K. corporate income tax rate reduction, net income
decreased $140 million to $2.9 billion primarily driven by lower
trading account profits and net interest income, partially offset by
a decrease in noninterest expense, a $240 million gain in 2014
related to the initial public offering (IPO) of an equity investment
and higher investment and brokerage services income. Results
for 2013 included a $450 million write-down of a monoline
receivable due to the settlement of a legacy matter. Net DVA/FVA
losses were $240 million compared to losses of $1.2 billion in
2013. Noninterest expense decreased $225 million to $11.8
billion due to lower litigation expense and revenue-related
incentives, partially offset by higher technology costs and
investments in infrastructure.
Average earning assets decreased $20.3 billion to $461.2
billion in 2014 largely driven by a decrease in trading assets to
further optimize the balance sheet.