Bank of America today reported larger-than-expected losses resulting from credit-related losses and poor investment banking returns. The company, which was one of the few to not report massive write-down charges on their investment portfolios due to subprime mortgage performance prior to releasing earnings, surprised analysts by reporting a 32% drop in profit for the 3rd quarter.
Analysts also questioned the company’s efforts to boost loan loss reserves to further protect against further loan degradation and performance.
From Reuters:
“We knew the credit situation was going to be bad, but this was worse than expected,” said Michael Mullaney, who helps invest $10 billion at Fiduciary Trust Co in Boston, which owns the bank’s shares.
“What causes us concern is the increase in reserves doesn’t appear aggressive, and the bank may need to reserve more in the future, which hits earnings,” he added. “The real surprise was investment banking, where revenue plunged.”
No one, not even Bank of America is immune from the problems associated with housing and the credit crunch.
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