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Bank of America Reports Strong Second-Quarter Net Income

July 18, 2012, 07:15 AM
Filed Under: Corporate Earnings
Related: Bank of America

Bank of America Corporation reported net income of $2.5 billion for the second quarter of 2012, compared to a net loss of $8.8 billion in the second quarter of 2011. The year-ago quarter included a total of $18.2 billion in pretax charges for certain mortgage-related items and other selected adjustments, including provisions for representations and warranties and goodwill impairment.

Relative to the same quarter a year ago, the results for the second quarter of 2012 reflect higher mortgage banking income, driven largely by lower provisions for representations and warranties, the absence of the goodwill impairment charge and improved credit quality across most major portfolios. In addition, the company had solid contributions from the wealth management and corporate and commercial banking businesses. This was partially offset by lower net interest income from the continued low-rate environment and lower loan levels.

“In a challenging global economy, we still see opportunities to do more with our customers and clients. Lending to commercial businesses increased for the sixth straight quarter -- with small business lending and commitments up 23 percent in a year -- and consumer credit is in the best shape in years,” said Brian Moynihan, chief executive officer. “This quarter we surpassed 10 million mobile banking customers, up 34 percent in a year. With about 45,000 new mobile customers a week, we are adapting to meet customer needs and to do more with them.”

“Once again, we had strong capital generation this quarter through a combination of earnings growth and a reduction in risk-weighted assets,” said Chief Financial Officer Bruce Thompson. “In one year, our Tier 1 common capital ratios have gone from being the lowest of the major U.S. banks to among the highest, and we've maintained our strong liquidity levels even as we reduced our long-term debt by $125 billion.”

As of June 30, 2012, the company's Basel 3 Tier 1 common capital ratio on a fully phased-in basis was estimated at 8.10 percent. This compares with the company's previous guidance of achieving a Basel 3 Tier 1 common capital ratio of more than 7.50 percent on a fully phased-in basis by year-end 2012.
“The fact that we exceeded our previous guidance for Basel 3 six months ahead of schedule points to the significant progress we have made this year to build capital, reduce risk-weighted assets and position the company for long-term growth,” Thompson added.

Read the full Bank of America Second Quarter 2012 News Release.

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