Bank of America Corporation posted a smaller-than-expected increase in quarterly profit on Wednesday as revenue in most of its businesses dropped, and the bank entered a new legal settlement linked to mortgage bonds.
The results underscore how Bank of America’s purchase of Countrywide Financial at the height of the housing crisis is still haunting the bank.
Reuters reports that Bank of America shares were down by 5.6 per cent to $11.59 in midday trading on the New York Stock Exchange.
Many of the bank’s revenue generators – including consumer banking, mortgages and debt, currency and commodities trading – turned in weaker performances in the first quarter. All told, adjusted revenue fell by 8.4 per cent to $23.85bn.
In a conference call with journalists, Chief Financial Officer Bruce Thompson said the drop in revenue, excluding accounting adjustments, reflected strong markets business and debt security gains a year earlier, and the tougher environment for interest rates in the first quarter of this year.
There were some bright spots at the Charlotte, North Carolina-based bank. It made more home loans, and investment banking fees increased.
Revenue in its wealth management business rose, which could bode well for Morgan Stanley, due to report quarterly results on Thursday.
Net income quadrupled as expenses dropped and the bank set aside less money to cover bad loans.