Bank of America seeks capital, cuts dividendsOctober 7th, 2008 - 7:13 am ICT by IANS
New York, Oct 7 (DPA) Bank of America Corp saw third quarter profits drop by more than two-thirds, prompting it Monday to halve its dividend payments and sell $10 billion in stock to raise money.”These are the most difficult times for financial institutions that I have experienced in my 39 years in banking,” Kenneth D Lewis, the bank’s chairman and chief executive said in a statement.
Profits fell 68 percent to $1.18 billion, or 15 cents per share, from $3.7 billion, or 82 cents per share, in the year-earlier period, the bank said after markets closed Monday.
Its declining profits came largely on industry-wide writedowns of mortgage-backed securities at the heart of the problem that prompted a $700 billion government bail-out plan, which was signed into law last week. Revenues rose 21 percent to $19.9 billion from $16.47 billion.
Still, despite the drop in profit, the Charlotte, North Carolina-based bank is weathering the global financial crisis better than many of its rivals that have folded or been in the red.
Bank of America has also used the turbulence to expand, snapping up the third-largest investment bank Merrill Lynch for $50 billion last month and mortgage lender Countrywide earlier this year.
The dividend cut to 32 cents will save the bank more than $1.4 billion.