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Business

Bank of America nearly triples first-quarter profit, to $4.2 billion

Latest update : 2009-04-20

Boosted by the acquisition of Wall Street investment bank Merrill Lynch, Bank of America made $4.2 billion in net profits in first-quarter income, nearly triple what it earned over the same period a year ago.

AFP - Bank of America Monday said it had net profit of 4.2 billion dollars in the first quarter, solidly boosted by its Merrill Lynch purchase of a year ago, on record revenue of 36 billion dollars.

The robust earnings were boosted by Bank of America's acquisition of Wall Street investment bank Merrill Lynch, which contributed more than three billion dollars to the government-rescued bank's bottom line, the bank said in a statement.

Bank of America, the largest US bank by assets, has received 45 billion dollars in government aid to weather the global financial crisis and has said it would seek to repay the public funds as quickly as possible.

The bank said it had paid 402 million dollars in preferred dividends in the January-March period to the US government.

Including the government dividend payment, earnings per share were 44 cents.

A year ago, the bank had first-quarter net income of 1.2 billion dollars, or earnings per share of 23 cents.

The Charlotte, North Carolina-based bank said its 2009 first-quarter results include Merrill Lynch, which it acquired on January 1, and mortgage lender Countrywide Financial, which was purchased on July 1, 2008.

Merrill Lynch contributed 3.7 billion dollars to net income, excluding certain merger costs, "on strong capital markets revenue," Bank of America said.

Countrywide also added to net income because of increased mortgage lending and refinancing volume.

Bank of America noted the year-ago period does not include Merrill Lynch and Countrywide results.

"The Merrill Lynch integration is on track and expected to meet targeted cost savings," the bank said. The Countrywide integration was also on track and cost savings from the acquisition were "ahead of schedule."

Revenue, after interest expense, more than doubled to a record 36.1 billion dollars from a year ago.

Bank of America said it had taken steps in the 2009 first quarter to boost its capital and liquidity position, including strengthening its loan loss reserves and building its cash position.

"The fact that we were able to post strong, positive net income for the quarter is extremely welcome news in this environment," said Kenneth Lewis, chairman and chief executive.

"It shows the power of our diversified business model as well as the ability of our associates to execute. We are especially gratified that our new teammates at Countrywide and Merrill Lynch had outstanding performance that contributed significantly to our success."

Bank of America received 25 billion dollars last year under the government's 700-billion-dollar Troubled Asset Relief Program (TARP), designed to bolster the US financial system reeling from global financial turmoil after the collapse of US investment bank Lehman Brothers.

In January, the US Treasury, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) said the government would invest another 20 billion dollars in the bank and guaranteeing shaky assets to help it weather the grinding financial crisis.

That second bailout was aimed at helping Bank of America absorb broker Merrill Lynch, which faced a meltdown last year as the credit crunch intensified.

As part of the January rescue, the government said it would provide protection against "the possibility of unusually large losses" on 118 billion dollars of assets backed by residential and commercial real estate loans, the market for which has been frozen due to the housing meltdown and credit crisis.
 

Date created : 2009-04-20

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