BoA reports Q1 profits

| April 16, 2010 | 0 Comments
BoA reports Q1 profits

Bank of America (BoA) has today reported its first quarter earnings, rising 0.7% to $2.83 billion (£1.83 billion) from $2.81 billion a year ago, boosted by record sales and trading activity at its investment bank, as well as its acquisition of Merrill Lynch.

However, the bank posted a $2.1 billion loss in its home mortgage business. It had set aside $9.8 billion to cover bad loans during the quarter, however, this is a significant improvement on the $13.4 billion it set aside a year earlier.

Many analysts predict loan losses should peak some time in the first half of the year.

Shares in the banking giant were up 2.6% at $19.98 in trading before the market opened. BoA shares have risen 29% this year.

Chief Executive Brian Moynihan said: “With each day that passes, the 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy.”

Yesterday, fellow banking giant JPMorgan Chase posted better-than-expected first quarter profits of $3.3 billion (£2.1 billion), compared with $702 million a year ago.

JPMorgan, which is the second-largest bank on Wall Street, also said its results were driven by its investment bank.

Returning to the BoA, in February it was sued by the New York Attorney General, Andrew Cuomo, for defrauding investors and the Government over its takeover of Merrill Lynch.

BoA, and two of its senior executives, Ken Lewis and Joseph Price, were accused of “enormous fraud” on taxpayers and shareholders over the takeover in 2008.

In September 2008, Merrill Lynch was quickly sold to BoA following the collapse of Lehman Brothers.

However, the takeover was criticised and, in particular, Ken Lewis (former chief executive of the bank), was blamed for the poor handling of the acquisition – which was finalised at the start of 2009.

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