Bank of America posted a first-quarter loss yesterday as it set aside an extra $6bn (£3bn) to cover litigation expenses, a figure that far exceeded the legal settlements the number two US bank has announced recently.
The bank reported a net loss attributable to shareholders of $514m, or 5 cents per share, for the first-quarter ended March 31 compared with a profit of $1.11bn, or 10 cents per share, a year earlier.
The previous quarter’s results were hit by $1.6bn in charges related to disputes with bond insurers. Analysts on average had expected earnings of 5 cents per share.
BofA’s shares, which have risen 5.3 per cent so far this year, were down 0.4 per cent at $16.33 in premarket trading. Revenue fell 3.8 percent to $22.66bn, excluding accounting adjustments, but beat the average analyst estimate of $22.33bn. The loss follows Bank of America’s best year since before the financial crisis.
The bank’s 2013 net income of $11.4bn was the highest since 2007, but large legal bills and settlements left over from the financial crisis remain a drag on performance. BofA made progress resolving many of its legal issues in the first quarter, although some proved to be costly.
BofA agreed in March to pay $9.5bn to settle claims that it sold Fannie Mae and Freddie Mac faulty mortgage bonds, helping it to end one of the largest legal headaches it still faced from the crisis.