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Bank of America reports lower-than-expected profits | Bank of America reports lower-than-expected profits |
(40 minutes later) | |
Bank of America Merrill Lynch has reported a 38% decline in profits for the first three months of the year compared with a year earlier. | |
It made a profit of $2bn (£1.23bn), but the bank's residential mortgage unit lost $2.39bn, as debts were not repaid. | |
High unemployment and falling property prices have seen many US households falling behind on their mortgages. | |
Analysts were disappointed by the figures which came after unexpectedly good results from rival JP Morgan. | Analysts were disappointed by the figures which came after unexpectedly good results from rival JP Morgan. |
"I think the reason seems to be Bank of America is struggling with the mortgage mess and cleaning up what is going on there," said David Morrison a market strategist at GFT Global Markets. | "I think the reason seems to be Bank of America is struggling with the mortgage mess and cleaning up what is going on there," said David Morrison a market strategist at GFT Global Markets. |
The first quarter result was, however, an improvement on the loss of $1.2bn dollars made in the final quarter of 2010. | |
The bank announced that Bruce Thompson, its chief risk officer, will also become chief financial officer in July. | The bank announced that Bruce Thompson, its chief risk officer, will also become chief financial officer in July. |
Chuck Noski, the current CFO, will become vice chairman of Bank of America. | Chuck Noski, the current CFO, will become vice chairman of Bank of America. |
Mortgage losses were one of the main causes of the financial crisis in 2008 which saw Bank of America merge with investment bank Merryl Lynch. | Mortgage losses were one of the main causes of the financial crisis in 2008 which saw Bank of America merge with investment bank Merryl Lynch. |
Heavy losses in the merged unit forced the bank to rely heavily on Federal funds through the Troubled Asset Relief Program. | Heavy losses in the merged unit forced the bank to rely heavily on Federal funds through the Troubled Asset Relief Program. |