(22 April 2009 – USA) Bank of America (BOA) recorded first quarter profit of US$4.24 billion (A$6 billion), primarily due to strong results by recently acquired Merrill Lynch.BOA, having recently acquired Merrill Lynch and Countrywide Financial, saw first quarter profits jump to US$4.2 billion, more than triple that of the first quarter of a tumultuous 2008, where profits were US$1.2 billion.
Merrill Lynch was the star performer for the newly combined group, contributing the lion’s share of US$3.5 billion.
The BOA operations that existed before the major acquisitions therefore were actually down on profit compared with the US$1.2 billion first quarter 2008 result.
Bank of America, the largest bank in America by assets, spent over US$30billion on takeovers as many banks struggled as a result of the global financial crisis.
The acquisitions have seen revenue jump from US$17.1 billion in the first quarter of 2008 to more than double that amount in the first quarter of 2009, at US$35.8 billion.
BOA’s Global Markets business unit became the best performer, with a swing to net income of US$2.4 billion (from a loss of US$1 billion in Q1 2008) due to the Merrill Lynch acquisition and generally better market conditions.
The Global Banking division saw net income drop from an even US$1 billion to just US$175 billion this quarter, primarily due to higher provisions.
Two of BOA’s six divisions saw net losses for the quarter; namely Global Card Services and Home Loans & Insurance, at US$1.8 billion and US$500 million respectively.
The Global Card Services division result was a turnaround from a US$867 million profit in Q1 2008, due primarily to provision expenses nearly doubling to US$8.2 billion as economic conditions led to deterioration in the consumer card, consumer lending and small business portfolios, including a higher level of bankruptcies.