CHARLOTTE, N.C. (AP) — The credit crisis all but wiped out fourth-quarter earnings at Bank of America Corp. and Wachovia Corp., but the banks did make some money — something that can’t be said for Citigroup and some other firms.
Profits fell 95 percent at Bank of America and 98 percent at Wachovia. The numbers, worse than analysts expected, show that the global credit squeeze is still causing more customers to fall behind on their bills and banks to lose money on securities they own.
“The continued turmoil in the capital markets and the dramatic change in the credit environment diminished our fourth-quarter results substantially,” Wachovia Chief Executive Ken Thompson said.
Bank of America’s Chief Executive Kenneth D. Lewis said conditions are “the toughest” he’s seen since becoming head of the biggest U.S. consumer bank in April 2001.
“The environment is very tough, and we expect it to remain so for some months to come,” Mr. Lewis said.
Bank of America shares rose $1.42, or nearly 4 percent, to $37.39 yesterday.
The bank recorded net income of $268 million, or 5 cents per share, in the three months ended Dec. 31, down from $5.26 billion, or $1.16 per share, a year ago. Revenue fell 31 percent to $12.67 billion.
Despite those numbers — and a $4.1 billion bet in purchasing beleaguered mortgage lender Countrywide Financial — Mr. Lewis said he expects Bank of America to generate earnings this year of “well above” $4 per share.
Crosstown rival Wachovia said that its fourth-quarter profit fell to $51 million, or 3 cents per share, from $2.3 billion, or $1.20 per share, a year ago.
Excluding merger-related expenses, Wachovia earned $160 million, or 8 cents per share.
The nation’s fourth-largest bank took a $1.7 billion write-down during the quarter due to weakening credit markets. Banks have been forced to reduce the value of bonds and debt backed by mortgages and other consumer loans that have increasingly been defaulted on in recent months.
Because of rising delinquencies and defaults, Wachovia also set aside $1 billion to cover future losses.
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