Bank of America said Friday its second-quarter net income rose 15 percent to $2.78 billion as improvements in the company's consumer loan businesses made up for a drop in trading revenue.
The bank's results beat expectations and provided further evidence that losses from failed loans at the nation's big banks may have peaked in the first half of 2010. Bank of America says it reserves to cover losses from loans fell 17 percent from the first quarter of this year and 39 percent from a year ago. JPMorgan Chase & Co. on Thursday also reported improvements in its consumer loan business.
In a statement, Bank of America chief executive Brian Moynihan said the company's "credit quality improved even faster than we expected."
Charlotte, North Carolina-based Bank of America earned 27 cents per share during the April-June period after paying preferred dividends. A year ago, it earned $2.42 billion, or 33 cents per share. Analysts expected profit of 22 cents per share in the most recent quarter, according to Thomson Reuters.
The company's trading business, which includes the Merrill Lynch operation, had a drop in income because of the steep dive the stock market took during the spring. JPMorgan Chase reported a similar slump in trading income.
Bank of America said revenue from trading of bonds, currencies and commodities fell $500 million from a year ago to $2.6 billion. Revenue from stock trading fell $300 million to $1 billion.
The bank was among the hardest hit during the credit crisis, and received $45 billion in bailout funds from the federal government, including $20 billion for Merrill Lynch. It repaid the money last year. Like nearly all banks in the country, the company faced waves of loan defaults as more customers fell behind and investments soured.
Bank of America's stock fell 19 cents, or 1.23 percent, to $15.20 in pre-opening trading.