Friday October 16, 05:29 PM
Bank of America reports 1.0-billion-dollar loss
NEW YORK (AFP) - Despite early signs of a fledgling recovery in the US financial sector, Bank of America Friday highlighted ongoing economic struggles posting a net quarterly loss of 1.0 billion dollars.
Amid hefty writedowns and growing consumer loan problems, the total loss for shareholders in the third quarter was even larger, at 2.24 billion dollars, or 26 cents per share, five cents worse than expected by most analysts.
The news came just after three other major US banks reported healthy third quarter results, suggesting the US financial sector may be slowly recovering from its worst crisis in decades even as the US economy has yet to emerge from recession.
Citigroup (NYSE: C - news) , which was drowning in losses in 2008 stemming from the collapse of the US housing bubble and the worldwide financial squeeze, topped expectations, posting a profit of 101 million dollars on Thursday.
While Goldman Sachs announced a profit of 3.19 billion dollars in the third quarter, more than triple the amount from a year earlier.
These results came on the heels of JPMorgan Chase, which said on Wednesday its quarterly profit had jumped to 3.6 billion dollars.
But Bank of America warned Friday its results were "negatively impacted by continued weakness in the US and global economies and stress on the consumer, which continues to result in high credit costs."
Like some other major banks, Bank of America (NYSE: IKJ - news) faced headwinds in mortgage and consumer segments, offset by stronger results from investment banking.
But unlike some of its peers, it has not yet repaid the government for its bailout loans. It received 25 billion dollars under a program to shore up capital in the banking system and another 20 billion to help it absorb Merrill Lynch (NYSE: MER - news) .
Patrick O'Hare at Briefing.com said Bank of America's results were "a notable disappointment."
"Although the bank noted the deterioration in credit quality slowed versus the prior quarter, it clearly still has credit quality issues, having added 2.1 billion dollars to its reserve for credit losses."
The company, the largest US bank by assets, paid special dividends of 1.2 billion dollars, including 893 million to the US government for its capital injections.
Chief executive Kenneth Lewis, who is stepping down at the end of the year, insisted the bank had performed well excluding these "non-core" costs.
"Excluding those items, our revenue continued to hold up well," Lewis said.
"Obviously, credit costs remain high, and that is our major financial challenge going forward. However, we are heartened by early positive signs, such as the leveling of delinquencies among our credit card customers."
Credit card operations lost 1.0 billion dollars and home loans lost 1.6 billion. Bank of America's global markets trading operations however posted a profit of 2.1 billion dollars.
The overall results were hurt by 2.6 billion dollars in writedowns on some assets, including from the purchase of Merrill Lynch, the troubled brokerage giant acquired by Bank of America at the height of the financial crisis.
Meanwhile, under an agreement announced Thursday Lewis agreed to work without pay for 2009 on the recommendation of the government "pay czar" overseeing compensation to bailed-out firms.
Bank of America also took a 402 million dollar pretax charge to pay the US government to terminate its asset guarantee program.
Revenue net of interest expense rose 32 percent to 26.4 billion dollars in the quarter.
The negative consumer losses were offset in part by trading profits from the Merrill Lynch division. Bank of America has also absorbed giant lender Countrywide Financial (NYSE: CFC - news) .
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