BoA reports colossal 77 percent shortfall

Source: Exec Digital USA

Date :21/04/2008 06:56:23

Charlotte, North Carolina-based Bank of America Corp., the second-largest U.S. bank, has announced that first quarter net income is a staggering 77 percent below the 2007 figure.

Net income for the first quarter of 2008 was $1.21 billion, which compares terribly to the figure of $5.26 billion for the same period last year. The massive drop has been attributed to $1.31 in trading losses and $2.72 billion in costs for uncollectable loans.

Earnings per share also dropped from $1.16 per share to a paltry 23 cents, sending the bank’s stock down as much as 2.6 percent in New York trading.

Doubts have been expressed over CEO Kenneth Lewis’s aim to increase profits by more than 20 percent this year, with the economic recession and weakened dollar looking set to continue affecting national and international finances.

Analysts have responded negatively to the released figures, with many offering pessimistic assessments of the bank’s progress. “It’s quite a bit below expectations,” said Walter Hellwig, senior vice president of Morgan Asset Management. “They are paddling upstream with regards to credit losses and credit quality.”

Revenue for the period also fell, a figure of $17.3 billion announced – six percent south of the amount recorded in the first quarter 2007 – as did profits, which declined 59 percent.

BoA was not alone in posting losses, however, as Citigroup Inc. and Wachovia Corp. (among others) suffered shortfalls.

April 21, 2008