BoA boosted by strong profit

22 July 2008

Bank of America (BoA) has posted unexpectedly strong second-quarter results, the fourth major US financial firm to do so over the past week.

A second-quarter profit of $3.4 billion has been announced by the bank, equating to 74 cents a share.

While this is a decline of over 40 per cent on first-quarter profits, it nevertheless beats out analysts' predictions - and, perhaps, signals that banks are beginning to shake off the worst effects of the credit crunch.

This point of view is bolstered by recent results from Wells Fargo and JPMorgan, both of whom posted healthy profits.

Even Citigroup, the Wall Street bank which has written off $40 billion in the crunch, posted a smaller-than-expected loss of $2.5 billion for the second quarter.

Speaking to the Times, Steve Roukis at Matrix Asset Advisors commented: "[BoA's declaration] suggests the credit crisis isn’t as bad as people thought.

Referring to the recent travails of Fannie Mae and Freddie Mac, the US mortgage lending giants who have recently been hit by declining market sentiment, he added: "A week ago, there was a tremendous fear about systematic risk to the system.

"There’s definitely a floor here."

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