Bank of America 2015 Annual Report Download - page 26

24 Bank of America 2015
Noninterest Expense
Table 5 Noninterest Expense
(Dollars in millions) 2015 2014
Personnel $ 32,868 $ 33,787
Occupancy 4,093 4,260
Equipment 2,039 2,125
Marketing 1,811 1,829
Professional fees 2,264 2,472
Amortization of intangibles 834 936
Data processing 3,115 3,144
Telecommunications 823 1,259
Other general operating 9,345 25,305
Total noninterest expense $ 57,192 $ 75,117
Noninterest expense decreased $17.9 billion to $57.2 billion
for 2015 compared to 2014. The following highlights the
significant changes.
Personnel expense decreased $919 million as we continue to
streamline processes, reduce headcount and achieve cost
savings.
Occupancy decreased $167 million primarily due to our focus
on reducing our rental footprint.
Professional fees decreased $208 million due to lower default-
related servicing expenses and legal fees.
Telecommunications expense decreased $436 million due to
efficiencies gained as we have simplified our operating model,
including in-sourcing certain functions.
Other general operating expense decreased $16.0 billion
primarily due to a decrease of $15.2 billion in litigation expense
which was primarily related to previously disclosed legacy
mortgage-related matters and other litigation charges in 2014.
Income Tax Expense
Table 6 Income Tax Expense
(Dollars in millions) 2015 2014
Income before income taxes $ 22,154 $ 6,855
Income tax expense 6,266 2,022
Effective tax rate 28.3% 29.5%
The effective tax rate for 2015 was driven by our recurring tax
preference benefits and tax benefits related to certain non-U.S.
restructurings, partially offset by a charge for the impact of the
U.K. tax law changes discussed below. The effective tax rate for
2014 was driven by our recurring tax preference benefits, the
resolution of several tax examinations and tax benefits from non-
U.S. restructurings, partially offset by the non-deductible treatment
of certain litigation charges. We expect an effective tax rate in the
low 30 percent range, absent unusual items, for 2016.
On November 18, 2015, the U.K. Finance (No. 2) Act 2015
(the Act) was enacted, reducing the U.K. corporate income tax rate
by two percent to 18 percent. The first one percent reduction will
be effective on April 1, 2017 and the second on April 1, 2020.
The Act also included a tax surcharge on banking companies of
eight percent, effective on January 1, 2016, and provided that
existing net operating loss carryforwards may not reduce the
additional eight percent income tax liability. Lastly, the Act provided
that expenses for certain compensation payments, such as PPI,
are not deductible to the extent attributable to July 8, 2015 or
later. These provisions resulted in a charge of approximately $290
million in 2015, primarily from remeasuring our U.K. deferred tax
assets.