Bank of America loses $2.24 bn as loan losses rise
Bank of America Corp said Friday it lost more than USD 2 billion in the third quarter as loan losses kept rising, providing further evidence that consumers are still struggling to pay their bills.
Charlotte: Bank of America Corp said Friday it lost more than USD 2 billion in the third quarter as loan losses kept rising, providing further evidence that consumers are still struggling to pay their bills.
The nation`s second-largest bank, which lost USD 2.24 billion after accounting for preferred dividends, said its losses for failed loans came to almost USD 10 billion during the July-September period, up almost USD 1 billion from the second quarter. The bank also added USD 11.7 billion to its reserves to cover bad loans.
Bank of America`s results were aided by profit from investment bank Merrill Lynch, including income from bond, stock and currency trading.
Its earnings follow the pattern set this week by Citigroup Inc. and JPMorgan Chase & Co, which also reported more loan losses during the third quarter as consumers struggled to keep up with their credit card and mortgage payments. Both JPMorgan Chase and Goldman Sachs Group Inc. reported big gains from their trading operations.
Bank of America said it lost USD 2.24 billion, or 26 cents per share, after accounting for the preferred dividends of USD 1.24 billion. That compared with earnings of USD 704 million, or 15 cents per share, a year earlier.
The loss was 5 cents more per share than the 21 cents forecast by analysts surveyed by Thomson Reuters Inc. Investors sent Bank of America shares down 59 cents, or 3.3 percent, to USD 17.51 in premarket trading. Shares closed Wednesday at USD 18.10.
"Obviously, credit costs remain high, and that is our major financial challenge going forward," CEO Ken Lewis said in a statement accompanying the earnings report. "However, we are heartened by early positive signs, such as the levelling of delinquencies among our credit card numbers."
The bank, which being investigated by federal authorities for its Merrill acquisition, has received USD 45 billion in bailout funds as part of the Treasury Departments USD 700 billion financial rescue package. It`s not known when it will repay the government.
Lewis, who is retiring at year`s end, has agreed to give up his salary and other compensation for 2009.