BofA profit tops view on improving credit

By Joe Rauch

CHARLOTTE, North Carolina (BestGrowthStock) – Bank of America Corp (BAC.N: ), the largest U.S. bank by assets, reported higher-than-expected second-quarter profit (Read more your timing to make a profit.) as credit costs declined.

The Charlotte, N.C.-based bank posted net income of $3.1 billion, or 27 cents per share, down from $3.2 billion, or 33 cents per share, a year earlier. Analysts had expected 22 cents per share, according to Thomson Reuters I/B/E/S.

“Our quarterly results show that we are making progress on our strategy to align around our three core customer groups — consumers, businesses and institutional investors,” Chief Executive Brian Moynihan said in the company’s earnings announcement.

Rival Citigroup Inc (C.N: ) is due to report quarterly earnings later Friday morning.

Bank of America’s profit beat came despite an 11 percent drop in revenue. Revenue net of interest expenses decreased to $29.4 billion from $33.1 billion.

The bank’s shares were down 4.4 percent to $14.71 in premarket trade.

Noninterest income fell 23 percent to $16.2 billion due to lower equity investment and mortgage banking income, and a decline in trading account profits.

But the bank’s credit costs declined for the fourth straight quarter. Its provision for credit losses was $8.1 billion, down $1.7 billion from the first quarter and down $5.3 billion from a year earlier.

During the quarter, the bank recognized $1.1 billion in pretax gains from sales of noncore assets, including its main investment stakes in two Latin American banks — Itau Unibanco and Santander Mexico.

The bank must raise $3 billion through asset sales by year’s end as a condition of repayment of its government bailout.

The bank’s shares fell 20 percent during the second quarter, outpacing a KBW Bank Index decline of 11 percent, amid an industry sell-off as the U.S. Congress debated financial reform.

(Reporting by Joe Rauch; editing by John Wallace)

BofA profit tops view on improving credit