Earnings of top US lenders bring little joy

Bank of America yesterday said its profit dropped 63 per cent as costs mounted from faulty foreclosures and flawed home loans while Citigroup reported a profit increase that was less than analysts estimated.

Bank of America's net income dropped in the fourth quarter to US$732 million from US$1.99 billion a year earlier. Adjusted for one-time items, profit was 29 US cents a share, beating analysts' estimate of 20 US cents.

Chief executive Brian Moynihan has spent his first three years cleaning up after his predecessor's takeover of Countrywide Financial and Merrill Lynch, selling more than US$60 billion of assets in the process.

The bank announced an US$11.7 billion deal to end disputes with Fannie Mae on bad home loans this month and joined an US$8.5 billion industry accord to compensate for abusive foreclosures.

Last year "was about resolving as many issues as they could", said Marty Mosby, an analyst at Guggenheim Securities. "While they've had to absorb some losses, they were less than the worst case, and that signifies progress."

Bank of America, ranked second by assets among US lenders, said revenue fell to US$18.7 billion from US$24.9 billion in the quarter.

Consumer and business banking's profit grew 15 per cent to US$1.4 billion as credit costs and expenses eased. Profit at the global banking unit rose US$95 million to US$1.4 billion.