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Bank Of America Reports $7.3 Billion Loss, Citing Charges

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http://www.nytimes.com/2010/10/20/business/20bank.html?ref=business

Bank of America, the nation’s biggest bank, announced Tuesday that operating profit rebounded in the third quarter, helped by improved credit conditions among consumers and businesses.

On a noncash basis for the quarter, the bank reported a loss of $7.3 billion because of a $10.4 billion write-down in the value of its credit card unit, attributed to federal regulations that limit debit fees and other charges.

Without the one-time charge, the bank earned $3.1 billion, or 27 cents a share. Wall Street had been expecting earnings of 16 cents a share, according to Thomson Reuters.

Analysts said the improving credit environment was a healthy sign, both for the bank and the broader economy. The bank set aside $5.4 billion in the quarter for credit losses, $2.7 billion less than the previous quarter and $6.3 billion less than the period a year ago.

“The biggest thing is that credit quality improved way more than anybody thought,” said Chris Kotowski, an analyst with Oppenheimer & Company. “That is the holy grail — anything else you can deal with. The one thing that kills value for banking institutions is when credit quality spirals out of control, so this should be the key to the stock doing well for the next year or two.”

Indeed, a substantial portion of the profit gain came from the expectation of lower losses among credit card and mortgage borrowers, rather than new business, as the bank was able to recapture money it had earlier set aside. It released $1.8 billion from reserves, compared with a release of $1.45 billion in the second quarter.

Excellent spin, time to buy Bank of America shares.

The only way is up..

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  • 152 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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