Bank of America, Citigroup post profits, beating forecasts

CHARLOTTE -- Bank of America and Citigroup became the latest big banks with better-than-expected earnings.

BofA trading business improves

Bank of America said its earnings after payment of preferred dividends were down at 33 cents a share compared with a profit of $3.22 billion, or 72 cents a share, a year earlier. The earnings beat the forecasts of analysts surveyed by Thomson Reuters, who forecast Bank of America would earn 28 cents a share.

Revenue rose to $32.77 billion, slightly below analysts' forecast of $33.1 billion.

In a statement, CEO Kenneth Lewis warned that "continued weakness in the global economy, rising unemployment and deteriorating credit quality" would affect the company for the rest of this year and next. That echoed the view taken Thursday by JPMorgan Chase executives who also reported continuing loan problems even as their company had strong second-quarter earnings.

Bank of America said its results also reflected a gain from selling part of its stake in China Construction Bank. They also included $713 million of dividend payments tied to a federal bailout, and a charge to bolster a federal deposit insurance fund.

Bank of America, like Goldman Sachs Group and JPMorgan Chase, said it had a handsome profit from its trading business. The company acquired Merrill Lynch early this year.

But, like JPMorgan, it did report continuing losses from failed loans. Bank of America said it recorded a $13.4 billion provision for loan losses during the second quarter as consumers struggled with debt amid rising unemployment.

Troubled loans, or non-performing assets, increased to $31 billion from $9.75 billion a year ago. The bank also lost $1.6 billion on card services, after posting a profit a year ago.