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Bank Of America Hit By Mortgage Meltdown
Bank of America posted a 77 percent loss in its quarterly profit for the first quarter of 2008 which may send shock waves through the mortgage and credit industries. The new trend shows that US homeowners with second mortgages, homebuilders and small business owners are showing an alarming trend in defaulting on their mortgages, which lead BoA to set aside $3.8 billion.
Kenneth D. Lewis, chairman and chief executive officer for Bank of America is very optimistic about the future stating “The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance. That said, we are continuing to invest in growth initiatives across the company, and believe our core strengths - including our diverse income stream, liquidity and capital - put us in a strong position to withstand the jolts to the system and emerge even stronger when conditions improve."
The primary factors reducing the banks first quarter earnings include setting $3.8 billion into reserves for growing mortgage concerns, $4.78 billion in provision expenses and $1.31 billion in trading related losses. However, retail sales increased 10 percent, a 15 percent increase in debit card purchases and other marketing techniques tend to show that BoA is taking the right steps for future business.
The bank says that credit quality has also deteriorated from more favorable qualities during the first quarter of 2007. Has a weakening economy, depreciating home values and a slowing economy taken its toll on US credit consumers and lending institutions?
Submitted by admin 4/21/08
Source= BoA News Release
Bank of America posted a 77 percent loss in its quarterly profit for the first quarter of 2008 which may send shock waves through the mortgage and credit industries. The new trend shows that US homeowners with second mortgages, homebuilders and small business owners are showing an alarming trend in defaulting on their mortgages, which lead BoA to set aside $3.8 billion.
Kenneth D. Lewis, chairman and chief executive officer for Bank of America is very optimistic about the future stating “The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance. That said, we are continuing to invest in growth initiatives across the company, and believe our core strengths - including our diverse income stream, liquidity and capital - put us in a strong position to withstand the jolts to the system and emerge even stronger when conditions improve."
The primary factors reducing the banks first quarter earnings include setting $3.8 billion into reserves for growing mortgage concerns, $4.78 billion in provision expenses and $1.31 billion in trading related losses. However, retail sales increased 10 percent, a 15 percent increase in debit card purchases and other marketing techniques tend to show that BoA is taking the right steps for future business.
The bank says that credit quality has also deteriorated from more favorable qualities during the first quarter of 2007. Has a weakening economy, depreciating home values and a slowing economy taken its toll on US credit consumers and lending institutions?
Submitted by admin 4/21/08
Source= BoA News Release