Litigation expenses push Bank of America into loss

Litigation expenses push Bank of America into loss

Bank of America Corp posted a first-quarter loss on Wednesday as it set aside an extra US$6 billion to cover litigation expenses, a figure that far exceeded the legal settlements the No. 2 US bank has announced recently.

The bank reported a net loss attributable to shareholders of US$514 million, or 5 cents per share, for the first-quarter ended March 31 compared with a profit of $1.11 billion, or 10 cents per share, a year earlier.

The previous quarter's results were hit by US$1.6 billion in charges related to disputes with bond insurers.

Analysts on average had expected earnings of 5 cents per share, according to Thomson Reuters I/B/E/S.

BofA's shares, which have risen 5.3 per cent so far this year, were down 0.4 per cent at US$16.33 in premarket trading.

Revenue fell 3.8 per cent to US$22.66 billion, excluding accounting adjustments, but beat the average analyst estimate of $22.33 billion.

The loss follows Bank of America's best year since before the financial crisis.

The bank's 2013 net income of US$11.4 billion was the highest since 2007, but large legal bills and settlements left over from the financial crisis remain a drag on performance.

BofA made progress resolving many of its legal issues in the first quarter, although some proved to be costly.

BofA agreed in March to pay US$9.5 billion to settle claims that it sold Fannie Mae and Freddie Mac faulty mortgage bonds, helping it to end one of the largest legal headaches it still faced from the crisis.

The bank also received a New York judge's approval for its $8.5 billion settlement with investors in mortgage securities that went sour.

"The cost of resolving more of our mortgage issues hurt our earnings this quarter," Chief Executive Brian Moynihan said in a statement.

More about

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.