BoA reports net loss of US$194m on TARP charge
Bank of America (BoA) has reported a net loss of US$194m for its fourth quarter compared to a loss of US$1.8bn reported a year earlier.
America’s largest bank was hit with a US$4bn charge during the final quarter of the year as it paid back the last of the taxpayer monies it owed under the Troubled Asset Relief Program (TARP).
BoA said it has now repaid the US$45bn in TARP funds it received from the US Government over the course of the financial crisis.
Revenue for the fourth quarter rose 59pc to US$25.4bn from US$16bn a year ago, the bank said, which reflected in part its acquisition of Merrill Lynch.
Full-year net income was US$6.3bn, compared with net income of US$4bn reported in 2008.
Results in the fourth quarter reflected continued elevated credit costs, although these were lower than in the third quarter of 2009, BoA said.
Loss is ‘disappointing’
“While it’s disappointing to report a loss for the fourth quarter, there were a number of important accomplishments worth noting,” said Chief Executive Officer and President Brian Moynihan (pictured).
“First, we repaid the American taxpayer, with interest, for the TARP investment. Second, we have taken steps to strengthen our balance sheet through successful securities offerings. And third, all of our non-credit businesses recorded positive contributions to our results.
“As we look at 2010, we are encouraged by signs the economy is improving, as we have seen in the stabilization of our credit costs, particularly in the consumer businesses,” Moynihan said.
“That said, economic conditions remain fragile and we expect high unemployment levels to continue, creating an ongoing drag on consumer spending and growth,” he added.
Rivals
In comparison to BoA’s fourth-quarter losses, rival US bank JP Morgan Chase last week reported profits of US$3.3bn for the same quarter, helped along by large profits from its investment banking arm.
However, BoA is not alone in reporting Q4 losses. Citigroup, the third-largest bank in the US, yesterday announced it had made a whopping US$7.6bn loss during its fourth quarter as it absorbed a large charge to enable it to repay all TARP monies.
More big US banks are expected to announce their Q4 results over the course of today and tomorrow, including Wells Fargo and Goldman Sachs and Morgan Stanley.