Bank of America not so hot after all?

Cannon_Fodder

http://news.bbc.co.uk/1/hi/business/8009280.stm


"US and European shares have fallen sharply after the biggest bank in the US reported a big increase in the amount it needed to cover bad debt. The update, from Bank of America (BOA), reignited worries over the stability of the banking sector and future losses that banks may face, observers said.
The Dow Jones index dropped 3.6% and the Nasdaq lost 3.5%. European markets also saw a sell-off."

"It was the first day of trading since weekend comments by President Barack Obama that the economy remained under strain, while his top economic adviser tempered hopes for a speedy recovery."

Andrew64

BoA's 'profit' - like that of Citibank - is simply the result of creative accounting:

Bank of America profits overshadowed by loan book fears

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5189128/Bank-of-America-profits-overshadowed-by-loan-book-fears.html

"The reserve build-up overshadowed BoA’s profit, which was largely the product of exceptional gains, including a $1.9bn gain from the sale of part of its stake in China Construction Bank, and a $2.2bn gain from mark-to-mark adjustments on some of Merrill’s structured notes."

Cannon_Fodder

Strange no-one has manged any positive spin, yet...

http://newsvote.bbc.co.uk/1/hi/business/8009484.stm


Asian shares have fallen sharply in Tuesday trading, echoing declines in the US caused by renewed concerns about the health of the world's banks. Hong Kong's Hang Seng index ended down 5.1%, its biggest drop in two weeks, while Japan's Nikkei lost 2.2%.
The declines were sparked by Bank of America, the largest in the US, reporting a big increase in the amount of funds it needs to cover bad debt.

ad44downey

Sometimes there is no amount of spin that can mask shocking news like this.

purch

Strange no-one has manged any positive spin, yet...

The positive spin is that they are making good profits and return on assets in their 'normal' Banking activities.

They will need to continue to do this for a number of quarters if they are going to rebuild their Balance Sheets to anything close to a respectible quality.

BoA's 'profit' - like that of Citibank - is simply the result of creative accounting

Trading Profit and Overall Profit are two seperate things, in all Industry not just Banking

Cannon_Fodder

Meanwhile some other US financial institutions are not helping to maintain the green shoot theory;

http://news.bbc.co.uk/1/hi/business/8012525.stm

"US investment bank Morgan Stanley has reported a first-quarter loss of $177m (£121.9m), down from a profit of $1.4bn in the same quarter last year.
The bank - hit by real estate and debt writedowns - cut its dividend to five cents a share from 27 cents. Revenues fell 62% from a year earlier to $3bn."


A bit confused about Wells Fargo "profit", supposed to be $3Bn, when only weeks ago they were saying;

"Wells Fargo said it expects to write down $71.4 billion of Wachovia's $482.4 billion loan portfolio, including $36 billion of option ARMs and $9.6 billion of commercial real estate."

Does that mean they would have reported a $74Bn profit, but for the write downs?

StevieJ

Cannon_Fodder wrote: »

Strange no-one has manged any positive spin, yet...

http://newsvote.bbc.co.uk/1/hi/business/8009484.stm


Asian shares have fallen sharply in Tuesday trading, echoing declines in the US caused by renewed concerns about the health of the world's banks. Hong Kong's Hang Seng index ended down 5.1%, its biggest drop in two weeks, while Japan's Nikkei lost 2.2%.
The declines were sparked by Bank of America, the largest in the US, reporting a big increase in the amount of funds it needs to cover bad debt.

Meanwhile Asian stocks bounce back on Wednesday :T And Euro stocks seem barely to have noticed.

purch

Does that mean they would have reported a $74Bn profit, but for the write downs?

The Trading Profit is quite separate from the write downs :rolleyes:

The fact that Stanley Morgan has reported a trading loss for the quarter is not very good news for the markets.