Bullish trading lifts BofA Q1 profit
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Bank of America yesterday said its first-quarter earnings rose 0.7 percent to US$2.83 billion as strong trading revenue helped the bank offset continuing losses on consumer loans.
The bank reported a US$2.1 billion loss in its home mortgage business, but said its other consumer loan businesses were showing signs of healing.
The bank's results after payment of preferred stock dividends are up slightly from US$2.81 billion a year ago. They surpassed expectations and provided further evidence that the United States banking industry and the economy are recovering.
JPMorgan Chase & Co on Wednesday also reported improvements in its consumer loan business, and said continuing credit losses were offset by income from trading.
BofA set aside US$9.8 billion to cover bad loans during the quarter, down 3 percent from US$10.1 billion the previous quarter. A year earlier, the bank had set aside US$13.4 billion. Many analysts predict loan losses should peak some time in the first half of 2010.
"The 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy," CEO Brian Moynihan said in a statement.
JPMorgan also reported that it saw signs of improvement in the economy.
Still, home mortgages remain a trouble spot for BofA, the nation's largest mortgage servicer. Although it set aside less money for overall loan losses, it increased the amount set aside for home mortgage losses, to US$3.6 billion, as its mortgage losses widened. Net revenue in the unit decreased 31 percent, as the bank saw lower mortgage production volume and a drop-off in refinance activity.
Home loans were the only one of the bank's six major business units to show a loss for the quarter.
The lender said losses in other consumer loans portfolios, including credit cards, fell during the quarter.
