Bank of America Profit Dips, But So Does Bad-Loan Reserve

Bank of America, the second largest U.S. bank, reported lower first-quarter profit from an accounting charge related to its debt. But results exceeded analysts’ estimates as it set aside a lower provision for credit losses.
The bank reported a charge of $4.8 billion tied to adjustments in the value of its debt, partially offset by gains of $3.4 billion from equity investments and debt-related transactions.
The bank said it earned $653 million in the first quarter, or 3 cents per share. That included the accounting charge of 28 cents per share because the value of Bank of America’s debt rose.
Revenue declined to $22.3 billion from $26.9 billion.
However, Bank of America said it set aside less to cover bad loans in the first three months of the year than it has since before the 2008 financial crisis.
The bank said its provision for credit losses declined 37 percent 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.”
“Our strategy is paying off,” said Chief Executive Officer Brian Moynihan. “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.”
Bank of America extended about $102 billion in credit in the first quarter of 2012. This included $66.6 billion in commercial non-real estate loans, $15.2 billion in residential first mortgages, $8.9 billion in commercial real estate loans, $4.4 billion in U.S. consumer and small business card, $760 million in home equity products and $5.9 billion in other consumer credit.

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