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EARNINGS ROUNDUP

Surprise 2% Drop in BofA's Profit

January 24, 2006|From Reuters

Bank of America Corp. surprised Wall Street on Monday with its first profit decline in more than four years as consumer bankruptcies drove up loan losses and trading profit slid.

The No. 2 U.S. bank joined rivals Citigroup Inc. and JPMorgan Chase & Co., in reporting big losses from a surge in bankruptcy filings in advance of Oct. 17 changes to U.S. bankruptcy law that made it harder for Americans to discharge debts.

Fourth-quarter net income for Charlotte, N.C.-based Bank of America fell 2% to $3.77 billion, or 93 cents a share, from $3.85 billion, or 94 cents, a year earlier. The profit decline was the bank's first since the third quarter of 2001.

Excluding merger and restructuring costs, profit was 94 cents a share, missing the average forecast of $1.02 from analysts polled by Reuters Estimates.

Revenue rose 3% to $14.12 billion, below forecasts of $14.59 billion.

Bank of America's credit losses increased $524 million, more than the company had forecast, from bankruptcies. Net charge-offs nearly doubled to $1.65 billion from $845 million.

Profit from capital markets and investment banking slid 79% to $123 million as the bank spent more on hiring and expansion.

Bank of America shares fell 23 cents to $43.96.

Chief Financial Officer Alvaro de Molina said 2006 earnings per share, excluding merger costs, should rise by a low-to-mid-single-digit percentage from $4.21 in 2005. Analysts had forecast $4.41 for 2006.

The bank said revenue might rise 6% to $60.17 billion, the low end of its 6%-to-9% long-term target.

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