After a 95 percent drop in profits, most banks would seriously think of shutting shop, however Bank of America Corp. managed a slim profit of $340 million for the last quarter, after having to shell out $1.6 billion in litigation charges from its purchase of Merrill Lynch & Co. There have been other hits to the bank’s profits brought about by decisions it made during the financial crisis.
Gary Townsend, the chief executive of Hill-Townsend Capital in Maryland said that the bank had a lot of work to do ahead, and said that he was not sure how much momentum they would need to actually start showing some good results. Bank of America’s rivals JP Morgan Chase & Co. as well as Wells Fargo & Co. have reported a combined profit of $10.6 billion, which are sure signs that they have put the worst of the financial crisis behind them.
The bank managed to register a mortgage rate surge as well as an increase in bond trading revenue. However, Brian Moynihan, who is the Chief Executive of the American bank has a lot of rescue work to do as the Bank of America’s mortgage investors have requested the bank to buy back bad loans amounting to 12 percent more than the last quarter. This could lead to future earnings being affected negatively.
According to reports the bank can repurchase claims at the end of the third quarter as it had reserves amounting to $16.3 billion, which is a 2 percent increase from the previous quarter.