68 per cent drop in BoA net income in Q1
NEW YORK - Bank of America Corporation Thursday reported net income of $653 million for the first quarter of 2012, a drop of 68 per cent compared with a year-earlier profit of $2.05 billion, as the second-largest US bank took accounting charges related to its debt.
The results topped analysts' estimates as credit quality improved.
The bank's provision for credit losses declined 37 per cent from the year-ago quarter, reflecting improved credit quality across all major consumer and commercial portfolios and the impact of underwriting changes implemented over the past several years.
The bank reported charges of $4.8 billion related to changes in the value of its debt, partially offset by gains of $3.4 billion from equity investments and debt-related transactions.
"Our strategy is paying off: With the economy steadily improving and because of the work we have done to strengthen and simplify our company, we saw improved profitability in all of our businesses this quarter compared to the fourth quarter of last year," said Chief Executive Officer Brian Moynihan in a statement.
First-quarter net income of $653 million was 3 cents a share, down from $2.05 billion, or 17 cents per share, a year earlier.
The Charlotte, North Carolina-based bank's revenue, net of interest expense, on a fully taxable-equivalent (FTE) basis was $22.5 billion, including negative valuation adjustments related to changes in the company's credit spreads of $4.8 billion pretax, or $0.28 a share.
The results compare to net income of $2.05 billion, or $0.17 per diluted share, in the year-ago quarter on revenue of $27.1 billion when the company reported negative valuation adjustments of $943 million, or $0.06 per share.
Excluding the valuation adjustments from both periods, revenue was down 3 per cent in the first quarter of 2012 to $27.3 billion.
"The narrowing of our credit spreads reflects the significant progress we've made to strengthen the balance sheet," said Chief Financial Officer Bruce Thompson.
"While the improvement in our credit spreads results in a negative adjustment to earnings this quarter, it should not overshadow the positive momentum that we are seeing in our businesses," Thompson added.
The bank continued to maintain strong liquidity in the first quarter of 2012 while positioning the balance sheet for significant debt reductions.
Its global excess liquidity sources increased to $406 billion at March 31, 2012, up from $378 billion at December 31, 2011, and $386 billion at March 31, 2011.
Conversely, the Long-term debt declined to $355 billion at March 31, 2012 from $372 billion at December 31, 2011 and $434 billion at March 31, 2011.
According to the bank, its total exposure to Greece, Italy, Ireland, Portugal and Spain, including net credit default protection, declined to $9.8 billion at March 31, 2012, compared to $10.3 billion at December 31, 2011 and $11.5 billion at March 31, 2011.
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