Bank of America posts $8.8bn loss
Bank of America, the biggest bank in the US, has slumped to an $8.8bn loss in the second quarter of the year, its largest-ever quarterly loss, after it paid more than $14bn of mortgage-related charges.
Markets had expected the loss as Bank of America said last month that it had settled $8.5bn claims from mortgage bond investors last month in addition to those claims.
But its income also suffered in the quarter as continuing low interest rates squeezed its lending margins, creating ongoing challenges for the bank in spite of it settling the claims.
“It’s a slow grind for them,” said David Hendler, senior analyst at CreditSights in New York.
Its chief executive Brian Moynihan said Bank of America’s credit losses fell during the quarter and some businesses improved their performance.
But he warned that the US economy is unlikely to improve much in the short term.
Analysts said the bank’s mortgage and interest income difficulties mean it is unlikely to raise its dividend for a while.
The bank’s loan book shrank, unlike many of its rivals, and the longer-term rates at which banks can lend are falling relative to the short-term rates at which banks borrow.