Bank of America swings into profit in third quarter

New York: Bank of America said today it swung back into profit in the third quarter, following a series of losses, as it sold off non-core assets and built up its balance sheet.

Bank of America reported net income of $ 6.2 billion for the July-September period, compared with a net loss of $7.3 billion in the year-ago period.

Earnings per share totaled 56 cents for the third quarter, more than double the 20 cents expected by analysts.

Revenue rose six percent from the year-ago period, to $ 28.7 billion, the Charlotte, North Carolina-based bank said in a quarterly earnings statement.

BofA noted several factors for the improvement in the quarter, including a $ 4.5 billion pretax positive

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“This quarter’s results reflect several actions we took that highlight our ongoing transformation toward becoming a leaner, more focused company… in a very challenging environment,” BofA chief executive Brian Moynihan said in the statement.

“Our focus this quarter was on strengthening the balance sheet by selling non-core assets and building capital to position the company for future growth,” said chief financial officer Bruce Thompson.

Thompson said the balance sheet was reduced by $ 42 billion from the second quarter of 2011 and Tier 1 common equity ratio has nearly doubled since early 2009.

But the bank lost its place to JPMorgan Chase in the quarter as the country’s largest bank in terms of both assets and deposits. JPMorgan had $ 2.29 trillion in assets at the end of the quarter, ahead of BofA’s $ 2.22 trillion. By deposits, JPMorgan led with $ 1.09 trillion, compared with $ 1.04 trillion for BofA.

Bank of America’s return to profit marked a milestone as the big financial institution seeks to recover from a disastrous 2008 acquisition of mortgage lender Countrywide Financial.

Until 2008, Countrywide played a leading role in generating mortgages that were bundled into securities andresold to investors.

Following a downturn in the US housing market, though, such mortgage-backed securities plunged in value, triggering the global financial crisis.

In the prior quarter, BofA reported a $ 9.1 billion loss, due to its record-breaking $ 14 billion settlement over subprime mortgage claims stemming from the financial crisis.

Without the mortgage settlement and other exceptional items, the bank would have posted a profit of $ 3.7 billion, the bank said.

AFP