Bank of America reports losses
US bank announces third-quarter losses of $2.2bn on back of consumer credit defaults.
The company’s provision for credit losses now stands at $11.7bn.
Further losses expected
Ken Lewis, chief executive officer of Bank of America, said that loan losses were likely to continue rising.
“Based on [the] economic scenario, results in the fourth quarter are expected to continue to be challenging as we close the year,” Lewis said during a conference call with analysts.
The third-quarter losses compared with earnings of $704m, or 15 cents per share, a year earlier. Revenue in the quarter increased 33 per cent to $26.04bn.
“Obviously, credit costs remain high, and that is our major financial challenge going forward,” Lewis said in a statement accompanying the earnings report.
“However, we are heartened by early positive signs, such as the levelling of delinquencies among our credit card numbers.”
Bank of America is considered by analysts to be particularly vulnerable amid rising US unemployment. The US jobless rate rose last month to 9.8 per cent.
The bank has about 53 million consumer and small business customers, meaning that it is exposed to payment defaults in the present economic climate.
The results come after Citigroup Inc and JPMorgan Chase also reported loan losses during the third quarter of 2009, as customers struggled to pay their credit card and mortgage debts.
General Electric also reported on Friday that its GECapital business, which includes credit cards, saw an 87 per cent drop in profits.