Bank of America reported a wider-than-expected quarterly loss, hurt by still-high loan losses and its repayment of US government bailout aid.
But the nation's largest bank said its credit problems are beginning to stabilise. Its fourth-quarter provision for credit losses was $10.1 billion, down 14 per cent from the third quarter.
"I would describe the outlook statement as cautiously optimistic," said Neil Smith, an analyst at WestLB. "It could have been worse. They key phrase is, 'We have seen stabilisation of our credit costs.' That's got to be good for the consumer business."
Bank of America said its quarterly loss $5.2 billion, or 60 cents per share, compared with a year-earlier loss of $2.4 billion, or 48 cents a share. Analysts' average forecast was a loss of 52 cents per share.
The report - along with similar earnings reports from other major US banks - signals the long, gradual recovery of the US economy from the recession and financial crisis, analysts said.
US Bancorp also reported fourth-quarter results today, posting a $602 million profit on higher fee income.
Bank of America's quarterly revenue jumped 59 per cent to $25.4 billion, primarily due to the addition of Merrill Lynch & Co.
Net income in its global markets unit was $4.8 billion, compared with a net loss of $3.7 billion a year earlier. The bank cited a more favorable trading environment and the addition of Merrill.
The Merrill acquisition also bolstered the global wealth and investment management unit, which saw net income rise by $816 million to $1.3 billion.
For the full year 2009, Bank of America posted net income of $6.3 billion, compared with $4 billion in 2008 during the height of the financial crisis.
In early December, the Bank of America repaid $45 billion in Troubled Asset Relief Program funds, leading a wave of bailout repayments by the country's biggest banks.
Bank of America said the repayment resulted in a $4 billion one-time charge in the fourth quarter. The charge totaled $5.022 billion including preferred stock dividends.
Excluding the one-time charges, the bank posted a quarterly loss of $194 million.
Nonperforming assets - the full range of delinquent and defaulted loans - totaled $35.7 billion at the end of the fourth quarter, up 5.6 per cent from the end of the third quarter.
Bank of America shares were up 8 cents to $16.40 in premarket trading.
Meanwhile, Wells Fargo & Co swung to a fourth-quarter profit on a pickup in fee income, even as it repaid $25 billion in bailout funds to the US government.
The fourth-largest US bank by assets reported a profit of $2.82 billion, or 8 cents a share. Analysts on average expected a loss of 1 cent a share.
In the fourth quarter of 2008, excluding the impact of Wachovia Corp, which Wells Fargo bought at the end of the year, it reported a loss of $2.73 billion, or 84 cents a share.
While analysts broadly view the San Francisco-based bank as among the stronger survivors of the financial crisis, it is facing mounting losses on former Wachovia mortgage portfolios.
Shares of Wells Fargo closed up 20 cents at $28.28 yesterday.
Morgan Stanley also posted a fourth-quarter profit of $413 million, helped by an upswing in its investment banking business.
The New York-based bank reported a quarterly net income of 29 cents a share for shareholders, compared with a loss of $10.5 billion or $11.35 a share in the year-earlier quarter.
It set aside $3.8 billion for compensation expenses in the fourth quarter.
Shares in Morgan Stanley closed up 78 cents or 2.6 percent, at $31.16 yesterday. Shares were up about 1 per cent in trading before the New York Stock Exchange's opening.
Reuters