Bank of America Faces $6.5Bn Loss
By Jonathan Stempel
Reuters
Bank of America Corp, the largest U.S. retail bank, may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios, according to a banking analyst.
Richard Bove of Punk Ziegel & Co also slashed his earnings forecasts for the bank through 2010, though he still expects a first-quarter profit.
He said actual losses in the portfolios should be “somewhat less” than the amount he expects set aside, suggesting the bank would be conservative in its forecast of future credit trends.
“I do not foresee the economy plunging to a level that will substantiate this reserve build,” wrote Bove, who has a “buy” rating on the bank, in a report dated March 24. “It is my impression that the management has made a decision to try to take, upfront, the potential losses that it believes may be nascent.”
Bove cut his profit per share forecast to $2.98 from $3.81 for 2008, to $3.96 from $4.30 for 2009, and to $4.78 from $4.93 for 2010. He sees first-quarter profit of 37 cents per share.
Bank of America was not immediately available for comment.
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[...] Bank of America Faces $6.5Bn Loss Bank of America Corp, the largest US retail bank, may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios, according to a banking analyst. [...]
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