BofA posts slim profit despite settlement, charges
Bank of America Corp eked out a third-quarter profit even after taking $1.6 billion of litigation charges, as the second-largest US bank set aside less money to cover bad loans.
The results show chief executive Brian Moynihan is still haunted by acquisitions forged during the financial crisis. The bank last month agreed to pay $2.4 billion to settle claims that it hid crucial information from shareholders when it bought investment bank Merrill Lynch & Co at the height of the financial crisis.
Bank of America had already set aside some money for the settlement, but it said that the pact, a UK tax charge and an accounting charge related to the value of its debt would reduce third-quarter earnings by 28 cents per share.
To boost profits, the bank launched a broad cost-cutting programme in 2011 that aims to eliminate $8 billion in annual expenses and 30,000 jobs.
But even with that project, called “New BAC,” non-interest expenses rose nearly one percent in the latest quarter to $17.54 billion.
The bank yesterday posted net earnings of $340 million, or nil per share, for the quarter, compared with $6.2 billion, or 56 cents a share, in the same period a year earlier, when the sale of assets and accounting benefits boosted earnings.
In its earnings presentation, Bank of America provided more clarity on possible losses from repurchases of soured loans that it sold to investors during the housing boom.