BofA May be Looking to Set Aside $6.5B for First-Quarter Loan Losses
According to banking analyst Richard Bove of Punk Ziegel & Co, the largest U.S. retail bank, Bank of America Corp may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios.
Bove also slashed his earnings forecasts for the bank through 2010, though he still expects a first-quarter profit. He said actual losses in the portfolios should be "somewhat less" than the amount he expects set aside, suggesting the bank would be conservative in its forecast of future credit trends.
"I do not foresee the economy plunging to a level that will substantiate this reserve build," wrote Bove, who has a "buy" rating on the bank, in a report dated March 24. "It is my impression that the management has made a decision to try to take, upfront, the potential losses that it believes may be nascent."
Published on March 24, 2008
Are you a retail Agent Looking for a Quote?