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NEW YORK: Bank of America announced on Monday a second-quarter profit of 3.41 billion dollars, down 41 percent from a year ago amid fresh write-downs from real estate but well above expectations.
The earnings amounted to 72 cents a share, topping the consensus Wall Street forecast of 53 cents per share, as the giant became the latest to beat forecasts in the hard-hit banking sector.
Net revenue rose three percent to a record 20.32 billion dollars.
"We are pleased with these solid results in a difficult financial environment," said Kenneth Lewis, chairman and chief executive.
"Outside of real estate-related products, our operating results were quite good virtually across all business segments. This performance demonstrates not only the advantages of our company's diversity and scale, but also the ability of our associates to differentiate Bank of America in the eyes of customers and clients."
The company set aside 5.83 billion dollars to cover losses from real estate and other activities, and charged off 3.62 billion.
Bank of America offset that with improved results in retail and investment banking, brokerage and a range of other services.
Separately, the company said Countrywide Financial, the leading mortgage company acquired by Bank of America amid deepening losses, posted a net loss of 2.33 billion dollars in the quarter, including some four billion in credit-related losses.
The Countrywide results are not included in the Bank of America earnings.
Bank of America shares rallied 10 percent to 30.25 dollars in late morning trade, helping the troubled banking sector extend its recovery.
Last week, Citigroup reported a smaller-than-expected loss and Wells Fargo a stronger-than-anticipated profit, propelling the banking sector out of its torpor. Merrill Lynch however reported wider--than-expected losses.
Fred Dickson, analyst at DA Davidson & Co. said the banking sector is not out of the woods yet, with losses from housing and credit woes still weighing on the banks.
"We continue to believe the final bell won't ring until we see housing prices stabilise and the level of write-offs and increases in commercial bank loan loss reserves peak or the Fed announces an interest rate hike," he said.
"So far, neither event has happened, although the losses associated with write-downs on collateralised mortgage debt obligations appear to be peaking. The bad news is that commercial and consumer loan losses are still accelerating." - AFP/de
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