BofA posts higher profit for first quarter

Written by Bloomberg | Updated: Apr 20 2012, 15:27pm hrs
Bank of America, the second-largest US lender, said first-quarter profit rose amid a rebound in trading and lower provisions for bad loans. The shares rose 5% in early trading.

Profit excluding certain one-time items increased to 31 cents a diluted share from 23 cents a year earlier, according to a statement on Thursday. That beat the average per-share estimate of 27 analysts surveyed by Bloomberg of 12 cents. Net income, which includes accounting charges, fell to $653 million, or 3 cents a share, from $2.05 billion, or 17 cents.

Chief executive officer Brian T. Moynihan regards trading units run by Thomas K Montag as critical to reviving income and had warned he would cut costs more deeply if results didnt improve. The business posted its first profit in three quarters amid the best start for the Standard & Poors 500 Index in 14 years and a lull in Europes debt crisis.

Their picture is improving for the first time in quite a while, Marty Mosby, a Nashville, Tennessee-based analyst at Guggenheim Securities LLC, said before the results were released. Businesses including investment banking have started to show some favourable lift. Mosbys firm manages more than $100 billion, including Bank of America shares.

The bank said its provision for credit losses was the lowest since the third quarter of 2007. Moynihan, 52, had told investors to expect the second phase of his efficiency plan, dubbed Project New BAC, to be in place this month. The firm most recently was scrutinising investment banking, trading and wealth management. The first part, which examined retail banking, targeted 30,000 job reductions at the Charlotte, North Carolina-based company.

Bank of America reorganised its reporting lines this month, combining deposit, credit-card and small business units into a new consumer-and-business banking division led by co-Chief Operating Officer David Darnell, 59. He also oversees real estate and wealth-management units.

Operations run by Montag, 55, the former Goldman Sachs trading head promoted to co-chief operating officer in September, were split into global markets and banking units. The banking unit incorporates parts of a former stand-alone business that catered to larger corporations with more than $50 million in annual revenue.

The lender has surged 60% this year in New York trading through Wednesday, the best in the Dow Jones Industrial Average, as capital improved and the firm passed the Federal Reserves stress test. Moynihan sold more than $50 billion in assets to boost capital and simplify the firm since taking over in 2010.

Moynihan has said that he will focus on selling home loans to customers of the firms domestic retail bank and wealth- management division. At the same time, hes seeking to divest wealth-management units outside the US, a person with direct knowledge of the process said this week.