Bank of America posts surprising profitsApril 21st, 2009 - 4:19 am ICT by IANS
New York, April 21 (DPA) Bank of America Corp. Monday became the latest US bank to report a stunning return to profitability in the first quarter of this year, easing some concerns about the financial industry despite expectations of further credit losses in future.
Bank of America reported a $2.8-billion profit in the first three months of 2009. The bank even earned $4.2 billion before making a series of dividend payments to preferred shareholders. The company reported $1.2 billion in profits in the first quarter of 2008.
Four other top banks - JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc. and Wells Fargo & Co. - also reported better than expected earnings last week, after taking heavy losses in the final months of 2008 and seeking billions of dollars in government loans.
But Bank of America’s stock price fell nearly 20 percent on the announcement as the bank said it would put $6.4 billion aside for its continuing exposure to bad loans in the credit crisis.
Bank of America chief executive Ken Lewis, like other bank heads last week, stressed that “extremely difficult challenges” remained despite the better profit outlook. The largest bank lender in the US, Bank of America is considered one of the most exposed to the ongoing credit turmoil.
The positive earnings came despite the bank’s acquisition last year of struggling financial firms Merrill Lynch & Co. and Countrywide Financial Corp. Lewis said Merrill Lynch contributed $3.7 billion to the bank’s profits in the quarter, excluding the merger costs.
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