Monday, April 21, 2008

BofA hit by writedowns and credit costs

Go to Financial Times original
Bank of America, slammed by writedowns and rising credit costs, on Monday said earnings dropped nearly 80 per cent in the first quarter to $1.2bn.

The largest US bank by market value said provision for credit losses soared by $4.78bn to $6.01bn, driven by problems in home equity and small business loans as well as loans to homebuilders.

The bank had $1.47bn in writedowns on its collateralised debt obligations and $439m on its leveraged loan commitments. The numbers were down significantly from the fourth quarter, in which BofA had $5.15bn in writedowns leading executives at the bank to stage a sharp pullback from the investment banking business.

Overall, BofA said it earned $1.21bn, or 23 cents a share, down from $5.26bn, or $1.16, last year. The figures fell short of analyst estimates of a profit of 41 cents a share. Net revenue dropped 6 per cent to $17bn.


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