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Bank of America’s profit tanked a whopping 77% in the recently-closed quarter as the bank took on an additional $5 billion in credit-loss provisions. The company cited ongoing challenges to the consumer such as high debt, subprime mortgage-related issues and a faltering economy as reasons for concern for future quarters. Still the bank reaffirmed its plan to integrate Countrywide in to its operations in the 3rd quarter.
The bank reported that retail loan originations were up 23% on lower financing costs. It appears that it’s decision to focus 100% on retail after closing its wholesale branch paid off as the originations for the bank were the highest since 2003. It makes you wonder how long after integrating Countrywide will executives wait before they close Countrywide wholesale on a similar retail growth strategy? My guess is Q4 Countrywide wholesale is no longer.
From Market Watch on the Bank of America profit-loss:
Bank of America Corp.’s first-quarter profit fell 77% as credit-loss provisions jumped $4.78 billion, driven by weakness in home-equity loans as well as credit extended to small businesses and home builders, the company said Monday.
“We remain concerned about the health of the consumer given the prolonged housing slump, subprime issues, employment levels and higher fuel and food prices,” CEO Ken Lewis said in a press release Monday morning.
Still, there were some bright spots. The company said that lower financing costs in January increased direct-to-consumer mortgage originations 23%, the highest since 2003.
The bank also reiterated its commitment to buying struggling mortgage lender Countrywide Financial Corp. and said it still expects that deal to close in the third quarter.
Last 3 posts by Morgan
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