Bank of America profit tumbles 41%

Even with the drop, banking giant is latest to do better than Wall Street expected. Other news: Newly-acquired Countrywide lost $2.3B in quarter.

Bank of America became the latest bank to report better-than-expected earnings, even as it revealed Monday that its profits plunged 41% during the most recent quarter.

The Charlotte, N.C.-based company reported earnings of $3.41 billion, or 72 cents a share, during the second quarter. That was down 41% from $5.76 billion, or $1.28, a year earlier.

Revenue hit $20.32 billion during the quarter, up from $17.73 billion a year earlier, driven by wider net interest margins, loan growth and higher income from mortgage banking and the company's investment and brokerage services.

Both figures were much better than expected. Analysts surveyed by Thomson Reuters were expecting the company to report a profit of $2.66 billion, or 53 cents a share, on revenue of $18.37 billion.

Wall Street cheered the news as Bank of America (BAC, Fortune 500) shares gained more than 11% in pre-market trading on the news.

"We are pleased with these solid results in a difficult financial environment," Ken Lewis, Bank of America's chairman and CEO said in a statement. "Outside of real estate-related products, our operating results were quite good virtually across all business segments."

Having recently completed its purchase of Countrywide Financial, Bank of America said the troubled mortgage lender lost $2.33 billion during the quarter. But Bank of America offered some encouraging news, saying it expects the acquisition to help profitability this year. When the deal was first announced in January, the company said it expected the deal to be earnings-neutral for the remainder of the year.

But like many of its peers, Bank of America was saddled by credit troubles.

Further deterioration in the housing market and slower economic growth put pressure on the company's housing, commercial real estate and consumer and small business-related loan portfolios.

The number of non-performing assets jumped to $9.75 billion, or 1.13% of all loans, during the quarter, the company said.

Bank of America also revealed it was forced to set aside $5.8 billion during the quarter to account for loans gone bad or ones that could falter in the future.

Still, Bank of America's latest results are another sign of encouragement for the hard-hit financial services sector.

Citigroup (C, Fortune 500) booked a $2.5 billion quarterly loss on Friday, but managed to stay ahead of Wall Street's dreary earnings projections.

Source: Money.cnn.com