(AFP) Posted Tuesday
October 18, 2011– 10:30am
Bank of America said Tuesday it swung back into profit in the third
quarter, following a series of losses, as it sold off non-core assets
and built up its balance sheet.
Bank of America, the biggest US
bank in terms of deposits, reported net income of $6.2 billion for the
July-September period, compared with a net loss of $7.3 billion in the
year-ago period.
Earnings per share totaled 56 cents for the third quarter, more than double the 20 cents expected by analysts.
Revenue
rose six percent from the year-ago period, to $28.7 billion, the
Charlotte, North Carolina-based bank said in a quarterly earnings
statement.
BofA noted several factors for the improvement in the
quarter, including a $4.5 billion pretax positive adjustment on
structured liabilities and a pretax gain of $3.6 billion from the sale
of shares of China Construction Bank.
"This quarter's results
reflect several actions we took that highlight our ongoing
transformation toward becoming a leaner, more focused company... in a
very challenging environment," BofA chief executive Brian Moynihan said
in the statement.
"Our focus this quarter was on strengthening the
balance sheet by selling non-core assets and building capital to
position the company for future growth," said chief financial officer
Bruce Thompson.
Thompson said the balance sheet was reduced by $42
billion from the second quarter of 2011 and Tier 1 common equity ratio
has nearly doubled since early 2009.
The return to profit marked a
milestone as Bank of America seeks to recover from its disastrous 2008
acquisition of mortgage lender Countrywide Financial.
Until 2008, Countrywide played a leading role in generating mortgages that were bundled into securities and resold to investors.
Following
a downturn in the US housing market, though, such mortgage-backed
securities plunged in value, triggering the global financial crisis.
In
the prior quarter, BofA reported a $9.1 billion loss, due to its
record-breaking $14 billion settlement over subprime mortgage claims
stemming from the financial crisis.
Without the mortgage settlement and other exceptional items, the bank would have posted a profit of $3.7 billion, the bank said.
Copyright © 2011 AFP
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