Bank of America posts profit, fueled by consumer banking
By Peter Rudegeair
(Reuters) - Bank of America Corp (BAC.N: Quote) posted a higher-than-expected quarterly profit on Wednesday as growth in its consumer and wealth management arms underscored the bank's progress in stitching together businesses it picked up in the financial crisis.
Profit at the bank's largest unit, retail banking, soared 32 percent as revenue rose and credit costs fell. The unit includes parts of Countrywide Financial Corp, the mortgage lender acquired by the bank in July 2008, and Merrill Lynch, the retail brokerage it bought in January 2009.
A key rationale for both those deals was the ability to sell a wide range of consumer banking products to Merrill Lynch and Countrywide customers, executives said at the time.
The bank said it issued more than 1 million credit cards in the third quarter, the highest number since 2008, and nearly two-thirds went to existing customers.
"We feel like a lot of the work that we have been doing in that segment has paid off," Chief Financial Officer Bruce Thompson told reporters on a conference call.
Profit at Bank of America's wealth management business also rose in the quarter, up 26 percent to $719 million thanks to record asset management fees.
To be sure, crisis-era acquisitions caused headaches for the bank, too. Its mortgage business lost $1 billion in the third quarter, compared with a loss of $857 million a year earlier. Countrywide has cost Bank of America more than $40 billion in litigation expenses and other charges linked to its bad subprime mortgages, and the bank set aside an additional $300 million for mortgage litigation in the latest quarter.
And Merrill Lynch's institutional sales and trading arm lost $778 million, up from a loss of $276 million in the same quarter last year, hurt by a 20 percent drop in fixed income, currency, and commodities trading revenue, excluding an accounting adjustment. Continued...