Bank of America Profits Fall 77%
Credit crunch sees quarterly profits plunge after weak trading on Wall Street and in retail banking
The credit crunch sent Bank of America's quarterly profits plunging 77% after weak trading on Wall Street and in retail banking. Bank of America, which has the largest branch network in the US, wrote off more than $5bn (£2.5bn) in trading losses and provisions against bad debts. First-quarter earnings fell from $5.26bn to $1.21bn.
Kenneth Lewis, chief executive, said: "The first quarter was much worse than our expectations three months ago." The bank joins several top financial institutions struggling with collapsing credit markets and a downturn in the US economy. The bank raised provisions against loan defaults by $4.78bn to $6.01bn and wrote down the value of its mortgage-related instruments by $1.47bn. Its shares dropped by 2.2% to $37.72 in New York.
The bank's response to the credit crunch has been aggressive; it is buying the troubled mortgage lender Countrywide Financial and recently expanded in the midwest by taking over LaSalle Bank.
Meanwhile, the 10th largest US bank, the Cleveland-based National City, announced that it had raised $7bn in equity to cope with steep mortgage losses. Its shares dropped by 28% in New York.
Kenneth Lewis, chief executive, said: "The first quarter was much worse than our expectations three months ago." The bank joins several top financial institutions struggling with collapsing credit markets and a downturn in the US economy. The bank raised provisions against loan defaults by $4.78bn to $6.01bn and wrote down the value of its mortgage-related instruments by $1.47bn. Its shares dropped by 2.2% to $37.72 in New York.
The bank's response to the credit crunch has been aggressive; it is buying the troubled mortgage lender Countrywide Financial and recently expanded in the midwest by taking over LaSalle Bank.
Meanwhile, the 10th largest US bank, the Cleveland-based National City, announced that it had raised $7bn in equity to cope with steep mortgage losses. Its shares dropped by 28% in New York.
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