BofA posts $8.8 billion net loss, worst ever

Bank of America Corp reported the biggest quarterly loss in its history, USD 8.8 billion, after more than USD 20 billion of charges linked to mortgages.

The results were in the middle of the range the bank forecast in late June when it announced an USD 8.5 billion settlement with mortgage investors.

Tuesday's quarterly results showed the bank's general loan losses are improving, in line with competitors, but overall results were overwhelmed by mortgage losses.

"It's a slow grind for them," said David Hendler, senior analyst at CreditSights in New York.

The largest US bank by assets reported a net loss of USD 8.8 billion, or 90 cents per share, compared with net income of USD 3.1 billion, or 27 cents per share, a year earlier.

Analysts on average expected a loss of 90 cents per share, according to Thomson Reuters I/B/E/S.

On June 29, the bank announced it would take a series of big one-time charges in the quarter related to a settlement with private investors who demanded the bank repurchase toxic home loans held in mortgage-backed securities.

Excluding the charges, the bank earned USD 3.7 billion, or 33 cents per share, for the second quarter.

The results highlight that many of the banks' business units -- most notably its credit card and investment banking units -- are becoming more profitable.

Global card services reported income of USD 2 billion, up from USD 826 million a year ago; global banking and markets income rose to USD 1.6 billion from USD 1 billion.

BofA's consumer real estate services unit lost USD 14.2 billion in the quarter, continuing a series of losses for the business dating back to the 2008 financial crisis.

Overall, revenue tumbled 54% to USD 13.5 billion, due to a provision taken as part of the mortgage settlement. Excluding that provision, revenue totalled USD 26.5 billion.

Like its peers, including JPMorgan Chase & Co and Citigroup Inc, BofA reported improving credit quality as loan losses continued to decline.

At BofA, net charge-offs -- loans the bank is writing off -- declined for the fifth straight quarter, and the bank lowered its loan loss provision.

The previously announced mortgage settlement reduced the bank's Tier 1 common equity ratio -- a core capital metric regulators use to judge a bank's health -- to 8.23% during the quarter.

Earlier this year the Federal Reserve denied permission for BofA to raise its dividend later this year. The bank currently pays 1 cent per share quarterly.

Some analysts have questioned whether a large second quarter loss would push such a move into 2012.

BofA shares fell 9 cents to USD 9.63 in pre-market trading. The shares fell 2.8% on Monday and have declined 27% this year, compared with a 12% drop in the KBW Banks Index.