B of A Profit Rises; Fleet Reports Loss
Bank of America Corp. posted higher quarterly profit Monday on cost controls and consumer banking gains, but FleetBoston Financial Corp. reported a loss on economic chaos in Argentina and the closing of its Robertson Stephens investment bank.
Lending profit rose at Charlotte, N.C.-based Bank of America, the No. 3 U.S. bank holding company after Citigroup Inc. and J.P. Morgan Chase & Co., on growth in consumer loans, deposits, loan syndication and advisory fees. FleetBoston, however, took charges to cover loan and investment losses in Argentina and to shutter its loss-making San Francisco investment banking operation.
Bank of America’s second-quarter earnings rose 10% to $2.22 billion, or $1.40 a share, from $2.02 billion, or $1.24 a share, in the year-earlier quarter. Cost cutting and growth in consumer loans and deposits helped the quarter.
In contrast, FleetBoston, the country’s No. 7 banking company, reported a loss of $386 million, or 37 cents a share, in the second quarter after taking $1 billion in charges. It earned $531 million, or 48 cents a share, a year earlier.
Boston-based FleetBoston took after-tax charges of $592 million in connection with losses on investments and corporate loans in Argentina--raising to $2.3 billion the total charges it has recorded since Argentina’s economic troubles began.
It also took a $278-million after-tax charge partly to shut its money-losing Robertson Stephens arm. FleetBoston said Friday that it will close the unit after it failed to reach a buyout deal with Robertson Stephens officials.
Bank of America shares fell 82 cents, to $67.79, on the New York Stock Exchange, while FleetBoston shares dropped $1.62, to $27.42, also on the NYSE.
Net interest income, or profit from lending, at Bank of America rose 3% from a year earlier, to $5.26 billion, as the bank benefited from low interest rates and higher consumer loan and deposit levels.
Bank of America’s cost cutting, combined with low interest rates that reduced its borrowing costs, offset a stock slump that eroded investments and trading revenue. Growth in consumer deposits also helped as rocky stock markets made people put money in bank accounts.
The bank’s expenses fell 7% to $4.49 billion.
Bank of America’s net charge-offs for loans on which it does not expect repayment rose to $888 million, or 1.06% of loans and leases, up from $787 million, or 0.82%, a year ago. The increase was concentrated in the consumer bank card portfolio, the bank said.
Excluding charges, FleetBoston earned $635 million, or 60 cents a share. That compared with profit of $724 million, or 67 cents a share, in the year-earlier quarter.
The provision it took for bad loans in the quarter increased $387 million after taxes from the first quarter to reflect the weak telecommunications environment and large corporate credits, FleetBoston said.
