Income at both Bank of America Corp. and Morgan Stanley took a tumble in the first quarter, but excluding one-time accounting charges, both banks' earnings managed to beat analyst expectations.
Bank of America said its net income fell to $653 million, or 3 cents a share, from $2 billion, or 17 cents a share, a year earlier.
But the bank attributed much of the slide to a $4.8 billion charge related to narrower credit spreads. Without the hit, Bank of America said its profit is up 40 percent to $3.7 billion, or 31 cents, from $2.6 billion, or 23 cents last year. Revenue fell 17 percent to $22.5 billion from $27.1 billion.
But "improving global markets sentiment as the European debt crisis stabilized coupled with favorable news regarding the U.S. economic environment" helped boost Bank of America's revenue for its fixed income, currency and commodities arm by $432 million.
Overall global trading income spiked to $798 million from a $768 million loss in the fourth quarter, though the amount still trailed last year's first-quarter profit of $1.39 billion.
With credit quality improving, the bank's bad-loan provisions fell 37 percent to their lowest level since mid-2007, the bank said.
The bank said it extended $102 billion in credit during the quarter, including $66.6 billion in commercial non-real estate loans, $15.2 billion in residential mortgages (84 percent for refinances) and $4.4 billion in cards for U.S.-based consumers.
Morgan Stanley, meanwhile, reported revenue dropping to $6.9 billion from $7.6 billion during the same quarter a year earlier due to a similar $2 billion credit spread-related accounting charge. But without the charge, revenue was up 14 percent to $8.9 billion from $7.8 billion.