Bank of America's (BAC) first-quarter earnings may have missed analysts' expectations - it reported adjusted EPS of 20¢ (14.5p), compared with consensus estimates of nearer 22¢ - but investors shouldn't be too concerned.
That miss was primarily down to $881m of litigation expenses related to mortgage-backed securities issued by Countrywide Financial - acquired by Bank of America in 2008. But underlying performance looks good. The bank reported $1bn of cost savings and credit quality continued to improve - non-performing loans fell to just 2.53 per cent of the book compared with 3.1 per cent a year earlier. So first-quarter pre-tax profit jumped to $3.63bn from just $719m a year earlier, while the core tier-one capital ratio stands at a healthy enough 10.58 per cent.
