Is Bank of America’s Xenophobia Getting In The Way Of Its Earnings?


It’s Second-Quarter Earnings Results Week (hi-ooo) and Bank of America is poised to disappoint a lot of shareholders as a result of its insistence on doing business almost exclusively in ‘Merica. (Yes, B of A spreads the love in 45 countries but derives only 13% of its revenue from abroad). Analysts estimate that the Bank in America will report a 2% drop in profit, its first decline in 2005. Citigroup, which is among the biggest banks in Mexico, Poland and South Korea and gets nearly half of its sales from abroad, is expected to post an increase of 7.7%. JP Morgan, deriving twenty five percent of revenue from outside the U.S., is predicted to be up 6.4%.
Responding to allegations that B of A has dug its own grave by taking its name too literally (and that it’s not necessarily a great idea to put all your eggs in the ‘Merican basket when the domestic economic has been “growing at sub-3 percent”), CEO Kenneth Lewis offered: “We do better when we play to our strengths, and our strengths are in the U.S.”
Bank of America Profit Trails as Citigroup, JPMorgan Go Abroad [Bloomberg]


Bank Of America Hoping To Fire Thousands Of Employees In Record Time

Remember Project New BAC, i.e. Bank of America's plan to transform itself from Ken Lewis's house of fun, where everyone went home happy but the concept of making money was less of a focus than keeping the good times coming, to an institution that did things like post profits? The bank has said previously that PNBAC "will result in $8 billion in annual savings by 2015—$5 billion from the first phase and $3 billion from a second phase" and while it stands by those figures and remains committed to cutting as many employees as it takes, some people would like them to be a bit snappier about it. Bank of America is accelerating a broad cost-cutting plan and has set a target of shedding 16,000 jobs by year's end—cuts that would see the company relinquish its title as U.S. banking's largest employer. The proposed year-end total of 260,000 would be the lowest count since 2008 and likely give Bank of America a smaller workforce than JPMorgan Chase, Citigroup, or Wells Fargo...Chief Executive Brian Moynihan is trying to speed the company's transformation into a smaller and more efficient operation as he tries to persuade investors that expenses can be adjusted to compensate for revenue lost to new regulations, an uneven economy and shaky markets. Since becoming CEO in 2010, he has shifted away from a nationwide expansion strategy embraced by his predecessors Hugh L. McColl Jr. and Kenneth D. Lewis, and shed many of the businesses that he considers to be nonessential...Hitting the new staffing target would fulfill a year early Mr. Moynihan's pledge to slash the bank's workforce by approximately 30,000. "If they want to make any headway toward improving profitability," said Sterne Agee & Leach Inc. senior banking analyst Todd Hagerman, "they need to accelerate the timeline." Bank Of America Ramps Up Job Cuts [WSJ]