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CNNMoney reports that Bank of America (NYSE: BAC) reports that its earnings fell 41% in the second quarter to 72 cents a share. In response, its stock is up 11% in pre-market. Why the celebration? Analysts expected Bank of America's earnings to tumble 48% to 53 cents, so it beat those expectations by 19 cents a share.
According to CNNMoney. Bank of America's revenue was up 14.6% to $20.32 billion during the quarter due to "wider net interest margins, loan growth and higher income from mortgage banking and the company's investment and brokerage services." Thomson Reuters surveyed analysts who expected revenue of $18.37 billion -- 10% lower than its actual results.
I am wondering whether some investors will think we have bottomed out of the banking crisis. I think it's too early to break out the champagne, but the coming rally could be a good time for nervous investors to bail out. That's because credit losses could keep rising -- Bank of America added $5.8 billion to reserves for bad loans and its Countrywide purchase could boost those reserves far more in coming quarters.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
Reader Comments (Page 1 of 1)
7-21-2008 @ 9:52AM
Andy said...
Perhaps this is a good sign for Apple's earnings coming up! Market optisim may be a good thing. I say this maybe in hope as I am already down 2K on my apple investment ( http://www.savingtoinvest.com/2008/07/did-i-buy-apple-to-late-2k-loss-to-date.html ) and as I lamented, I wish I had the bought the stock this week, rather than before the iPhone. Anyway, I will wait and see if my paper losses grow or disappear today.
7-21-2008 @ 9:54AM
Mike said...
Well, this is true Karma. BOA and Wells Fargo discarded the rule of law, opened accounts to millions of illegal immigrants who were allowed to open these accounts below the standards of american cititizens
I hope they fold.
7-21-2008 @ 10:09AM
Guarionex said...
Bank of America is terrible. As soon as I pay off my debt with them, I'm jumping ship to a local bank. Their interests are not in the stratosphere and for what I hear they treat their customers with respect.