BoA Results; Misses On Revenues Are Always Punished

Bank of America (BAC US) 4Q23 results out... headlines look like revenues slightly missed (o/w FICC missed, equities beat, primary inline). In profit terms, "adjusted" beat but GAAP earnings missed (net income USD3.1bn and EPS USD0.35 vs. consensus: 4.2bn and 0.50 respectively).

1. USD2.1bn of exceptional costs relating to FDIC (related to failed banks in FY23) is the key reason for the GAAP profit miss but it's the revenue situation the equity market will be more concerned about. Consumer banking revenues 4% lower (rates coming off in US), and with more reserve building... quite a negative view on US consumer going forwards... poor lateral for US retail (WFC, regional banks, Citi). Non-performing assets up another 8bp in the quarter.
2. Inv bank (IB) revenues a mixed bag... markets marginally higher than 4Q22 and banking (primary) lower. Key is FICC down 4% on rates and credit (weak lateral for DBK and BARC in Europe) but equities up 13% (positive for BARC and UBSG). Really good period in DCM though (good for BARC), decent in ECM and lower in M&A advisory. No comment at all on pipeline here.
3. Overall, the FICC performance along with US domestic indicators aren't ideal and this is a muted revenue performance from an equity that's traded really well since the October lows, hence the equity pullback now.

In credit terms, this isn't a great indicator for credit tied to the US consumer (across banks, RMBS, agencies and those European companies with big US operations) but it's only a single datum very early in results season.