Bank of America still facing mortgage woes

You’ll need a big cushion to sit on.

Largest U.S. lender by assets, Bank of America, may have to build its capital cushion by $50 billion and renege again on CEO Brian T. Moynihan’s pledge to raise the firm’s dividend as mortgage losses drain funds. The bank’s home-mortgage mess has booked roughly $30 billion in loan write-downs and settlements over the past year and is weighing the possibility that it will have to raise more capital to comply with new global standards to be phased in over several years, starting in 2013. This may stall the bank’s stated plan to boost its common stock dividend after the Federal Reserve denied its opportunity to raise its quarterly dividend from $0.01 a share until its capital cushion improves.

On Thursday, JP Morgan Chase (JPM) delivered second quarter earnings results that were $0.06 ahead of Wall Street’s expectations. On top of the earnings beat, JPM reported impressive growth with revenues up 7% compared to analysts’ forecast of a 2% decline.


Citigroup (C) also delivered better-than-expected second quarter results. EPS came in at $0.13 above consensus estimates. Revenues did decline 7% at Citi, but were still well ahead of the Street’s expectations. Now it’s Bank of America’s turn to report earnings. Analysts on average are estimating that Bank of America will lose $0.85 a share, while revenue is expected to drop 34% to $19.2 billion. Bank of America said June 29 it would lose $8.6-9.1 billion or $0.88-0.93 a share in the second quarter.

Bank of America (BAC : NYSE : US$9.72), Net Change: -0.28, % Change: -2.80%, Volume: 225,107,155

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Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

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