Bank of America swings into profit

NEW YORK: Bank of America said Tuesday it swung back into profit in the third quarter, following a series of losses, as it sold off non-core assets and built up its balance sheet.

Bank of America, the biggest US bank in terms of deposits, reported net income of $6.2 billion for the July-September period, compared with a net loss of $7.3 billion in the year-ago period.

Earnings per share totaled 56 cents for the third quarter, more than double the 20 cents expected by analysts.

Revenue rose six percent from the year-ago period, to $28.7 billion, the Charlotte, North Carolina-based bank said in a quarterly earnings statement.

BofA noted several factors for the improvement in the quarter, including a $4.5 billion pretax positive adjustment on structured liabilities and a pretax gain of $3.6 billion from the sale of shares of China Construction Bank.

"This quarter's results reflect several actions we took that highlight our ongoing transformation toward becoming a leaner, more focused company... in a very challenging environment," BofA chief executive Brian Moynihan said in the statement.

"Our focus this quarter was on strengthening the balance sheet by selling non-core assets and building capital to position the company for future growth," said chief financial officer Bruce Thompson.

Thompson said the balance sheet was reduced by $42 billion from the second quarter of 2011 and Tier 1 common equity ratio has nearly doubled since early 2009.

The return to profit marked a milestone as Bank of America seeks to recover from its disastrous 2008 acquisition of mortgage lender Countrywide Financial.

Until 2008, Countrywide played a leading role in generating mortgages that were bundled into securities and resold to investors.

Following a downturn in the US housing market, though, such mortgage-backed securities plunged in value, triggering the global financial crisis.

In the prior quarter, BofA reported a $9.1 billion loss, due to its record-breaking $14 billion settlement over subprime mortgage claims stemming from the financial crisis.

Without the mortgage settlement and other exceptional items, the bank would have posted a profit of $3.7 billion, the bank said.

Copyright AFP (Agence France-Presse), 2011