CHARLOTTE, N.C. – Bank of America Corp. warned of worsening loan default problems Monday even as it posted a first-quarter profit of $2.81 billion. Investors concerned about the banking industry's health sent financial stocks and the overall market sharply lower.
Although Bank of America said higher revenue from the purchase of Merrill Lynch & Co. helped offset a surge in credit costs, it took a hefty $13.4 billion provision for credit losses during the first three months of the year.
The bank's stock fell $1.80, or 17 percent, to $8.50 in midday trading as the overall stock market slid. Although last week Wall Street was happy with better-than-expected results from JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc., banking companies generally benefited during the quarter from unusually strong bond trading, a trend not expected to continue while loan problems persist.
Charlotte, N.C.-based Bank of America reported a similar performance during the first quarter.
"Like it or not, capital markets is now a core business for Bank of America, and that has more volatile returns than other businesses," said Celent banking analyst Bart Narter. "Bank of America is no longer exclusively a retail bank and there can be more fluctuations."
Bank of America earned $2.81 billion after paying preferred dividends, or 44 cents per share, compared with a profit of $1.02 billion, 23 cents per share, in the year ago period. Analysts surveyed by Thomson Reuters expected profit of 4 cents per share.
Source: AP NEWS
Although Bank of America said higher revenue from the purchase of Merrill Lynch & Co. helped offset a surge in credit costs, it took a hefty $13.4 billion provision for credit losses during the first three months of the year.
The bank's stock fell $1.80, or 17 percent, to $8.50 in midday trading as the overall stock market slid. Although last week Wall Street was happy with better-than-expected results from JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc., banking companies generally benefited during the quarter from unusually strong bond trading, a trend not expected to continue while loan problems persist.
Charlotte, N.C.-based Bank of America reported a similar performance during the first quarter.
"Like it or not, capital markets is now a core business for Bank of America, and that has more volatile returns than other businesses," said Celent banking analyst Bart Narter. "Bank of America is no longer exclusively a retail bank and there can be more fluctuations."
Bank of America earned $2.81 billion after paying preferred dividends, or 44 cents per share, compared with a profit of $1.02 billion, 23 cents per share, in the year ago period. Analysts surveyed by Thomson Reuters expected profit of 4 cents per share.
Source: AP NEWS
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