Although there's still some debate about whether big is truly beautiful, there's no denying that both Bank of America (BofA) and Citigroup continue to bring home the bacon.
The purchase of FleetBoston and growth in the bank's consumer finance business helped BofA post third-quarter profits of $3.76bn, up 29% on the same period 12 months ago. Profit from the bank's global corporate and investment banking division rose 9.1% to $475m as the unit gained market share in bond underwriting and equity-linked offerings in the period. Fees from investment banking activities rose 6.3% to $438m. The bank's private banking and asset management business pulled in profits of $469m, up 83%.
Bank CEO Kenneth Lewis said that 'business momentum remains strong' and confirmed that the integration of the Fleet businesses is on or ahead of schedule. Lewis and his team are cutting 17,000 jobs following the Fleet acquisition, mostly on the retail side, but are also spending some $600m in the next five years to beef up the bank's investment banking franchise.
And Citigroup is back on track after a tough second quarter, when the world's largest financial services company wrote off billions for legal exposures to Enron and WorldCom. Third quarter profits came in at $5.31bn, up 13% on the same period 12 months ago. Profits over at the investment bank rose 7% to $1.45bn. Profits from investment management activities were up 38% at $502m.
CEO Charles Prince said that 'income in our corporate and investment banking segment increased....despite reduced capital markets activity and the impact of a lackluster quarter in fixed income trading, which were offset by excellent performances in underwriting and our transaction services business'.