Revenue from Middle Market Banking was $838 million, an increase of $28 million, or 3%, from the prior year. Revenue from Commercial Term Lending was $312 million, an increase of $13 million, or 4%, compared with the prior year. Revenue from Corporate Client Banking was $406 million, an increase of $80 million, or 25%, from the prior year. Revenue from Real Estate Banking was $113 million, a decrease of $2 million, or 2%, from the prior year.
The provision for credit losses was a benefit of $3 million compared with a $40 million expense in the prior year. Net charge-offs were $50 million in the current quarter (0.16% net charge-off rate), compared with net charge-offs of $99 million (0.36% net charge-off rate) in the prior year and net recoveries of $18 million (0.06% net recovery rate) in the prior quarter. The allowance for loan losses to period-end loans retained was 2.06%, down from 2.34% in the prior year and 2.15% in the prior quarter. Nonaccrual loans were $673 million, down by $380 million, or 36%, from the prior year due to repayments and loan sales, and down by $203 million, or 23%, from the prior quarter due to repayments and charge-offs.
Noninterest expense was $599 million, an increase of $20 million, or 3%, from the prior year, reflecting higher headcount-related 2 expense.
Key Metrics and Business Updates: (All comparisons refer to the prior-year quarter except as noted)
- Return on equity was 29% on $9.5 billion of average allocated capital.
- Overhead ratio was 34%, unchanged from the prior year.
- Gross investment banking revenue (which is shared with the Corporate & Investment Bank) was $443 million, up $93 million, or 27%, from the prior year and up $12 million, or 3%, from the prior quarter.
- Record average loan balances were $126.0 billion, up $16.1 billion, or 15%, from the prior year and $3.9 billion, or 3%, from the prior quarter.
- Record end-of-period loan balances were $128.2 billion, up $16.2 billion, or 14%, from the prior year and up $4.5 billion, or 4%, from the prior quarter.
- Average client deposits and other third-party liabilities were $199.3 billion, flat compared with the prior year and up $8.4 billion, or 4%, from the prior quarter.
ASSET MANAGEMENT (AM)
|Results for AM($ millions)||3Q12||4Q11|
|4Q12||3Q12||4Q11||$ O/(U)||O/(U) %||$ O/(U)||O/(U) %|
|Provision for Credit Losses||19||14||24||5||36||(5)||(21)|
Discussion of Results:
Net income was $483 million, an increase of $181 million, or 60%, from the prior year. These results reflected higher net revenue, partially offset by higher noninterest expense.
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