Friday, January 21, 2011

BAC Efficiency Ratio Q4 2010 VS Q4 2009 (Updated)

I updated this post as I realized I had used the wrong data (blame it on a really boring options expiration day).

Ouch!  This past quarter the efficiency ratio was 93.2% (non interest expense / revenue net of interest expense) versus 65.3% in Q4 2009.  That is a pretty massive increase in expenses while total revenue net of interest expense dropped from $119,643 in Q4 2009 to $110,220 in Q4 2010 (an 8% drop in revenues).

So you have falling revenues and higher expenses.  In Fiscal 2010 BAC spent 83,108 in non interest expense (70,708 backing out 12,400 in goodwill impairment, anyone say they paid too much for Countrywide) versus 66,713 in Fiscal 2009.  The result was an efficiency ratio of 75.4% (64.2% net of goodwill) for Fiscal 2010 versus 64.2% for Fiscal 2009.

This is not a good trend and whatever CNBC analysts say, this bank is trouble.  


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