BofA reports Q2 numbers, income down 15%, continued cost cutting cited

July 18, 2012 by · Leave a Comment
Filed under: Stock Market News 

After reading through this, it looks like continue slogging through the bad loans and weakening U.S. economy.  I did notice the banks loan loss reserves have fallen a considerable amount, likely to their view that the loan book is less risky than it was a year ago.   The problem now is with Washington D.C. and dealing with the deficit, profligate spending and large entitlement programs that will need to be reformed is they are to remain viable.

We will just need to sit tight and watch.   I would continue to reduce debt and build savings while we grind this out.  I believe we have another major leg down and another recession in the works before we start really gaining traction.  Traditionally we have seen large market moves in the fall so hopefully we are not seeing the lull before the storm.

Reuters – Bank of America  said it plans to slash costs by $3 billion annually in commercial lending, investment banking and wealth management, becoming the latest big bank to take aim at expenses in a sluggish economy.  The second-largest U.S. bank announced the cost cuts as it posted second quarter results that illustrate the pressure it is under. Bank of America said its loan book shrank from the same quarter last year, its interest income fell 15 percent, and each of its divisions except for mortgage lending posted lower revenue.

Mortgage lending improved mainly because in last year’s second quarter the group took more than $20 billion of charges.  With revenue under pressure, the bank cut costs by 25 percent, helping it post a profit for the quarter of $2.5 billion. Its work force shrank by more than 12,000 from a year earlier to 275,460.

Bank of America began the first phase of its cost-cutting plan in 2011, with the goal of saving $5 billion a year and eliminating 30,000 jobs by the end of 2014. That phase of the plan focused on consumer banking and information technology.

The second phase of the plan, known as Project New BAC, aims to cut costs by $3 billion a year by mid-2015. It does not target a particular number of job cuts, but does focus on capital markets businesses, investment banking, commercial lending and wealth management. Executives have said they will likely cut fewer jobs in this round because people in the businesses involved tend to be better paid.

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