Stock of Bank of America Corp saw a biggest single decline of past 3 months here on Wednesday, following the assessment of a dwindling loan portfolio and a profit margin that was amplified through smaller loan reserves. The shares were down by almost 5 % close to $7.53.
Reporting its financial results for the second quarter before the opening, Bank of America Corp swung to a profit of $2.46 billion, benefitting as compared to the year ago period when the bank took a severe hit from the soured mortgages. Most of the last year was spent in clearing the overhangs from the 2008 acquisition of Countrywide Financial Corp, the mortgage lender.
Reduced provisions for credit quality in US helped the bank in reporting the profit. Total loans for the June quarter decreased by $10 billion, as compared to the previous quarter to $892.3 billion.
According to the market experts, even though the more than expected financial performance is a positive for the firm , most investors are likely to struggle with a sub 6 per cent return on tangible equity.
According to JPM securities, the beat was overall of low-quality and even though the results were Ok given the bad conditions, the backdrop doesn’t seem to be improving and the mid-single digit ROEs are also likely to continue.