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Just asking: Could it be their Tier 1 capital is wipeout? Of couse, just asking.
Dec. 12 (Bloomberg) -- Bank of America Corp. Chief Executive Officer said fourth-quarter earnings will be ``quite disappointing'' and credit markets ``will probably remain challenging into next year.''
``You certainly can assume results will again be quite disappointing,'' Lewis told investors at a conference in New York. The second-biggest bank by assets after Citigroup Inc. does expect to be profitable in the fourth quarter, he said.
Bank of America fell 2.1 percent in early New York trading. The company said last month it may need to write down $3 billion of debt securities in the fourth quarter that lost value because of defaults on subprime mortgages. Lewis said today the cost will be more than that.
``We expect charge-offs to increase next year, particularly on the consumer side,'' Lewis said in response to a question at an industry conference sponsored by Goldman Sachs Group Inc. ``The commercial side seems benign.''
Analysts have been estimating Bank of America will earn 76 cents a share in the fourth quarter.
The credit markets ``have turned down again and will probably remain challenging into next year,'' Lewis said. ``Our trading revenue has been considerably depressed by the lack of business activity and widening spreads in a number of product categories.''
Lewis said writedowns for debt instruments known as collateralized debt obligations, or CDOs, is ``unknowable.'' Bank of America's Tier 1 ratio -- a cushion against bad loans that's monitored by regulators -- has declined from 8.22 percent at the end of the third quarter, Lewis said.
``We expect to rebuild Tier 1 capital to our 8 percent target, but with higher capital markets losses and provision expense, we may not now be able to resume buybacks until 2009 instead of the second half of next year as we had hoped,'' Lewis said.
``You certainly can assume results will again be quite disappointing,'' Lewis told investors at a conference in New York. The second-biggest bank by assets after Citigroup Inc. does expect to be profitable in the fourth quarter, he said.
Bank of America fell 2.1 percent in early New York trading. The company said last month it may need to write down $3 billion of debt securities in the fourth quarter that lost value because of defaults on subprime mortgages. Lewis said today the cost will be more than that.
``We expect charge-offs to increase next year, particularly on the consumer side,'' Lewis said in response to a question at an industry conference sponsored by Goldman Sachs Group Inc. ``The commercial side seems benign.''
Analysts have been estimating Bank of America will earn 76 cents a share in the fourth quarter.
The credit markets ``have turned down again and will probably remain challenging into next year,'' Lewis said. ``Our trading revenue has been considerably depressed by the lack of business activity and widening spreads in a number of product categories.''
Lewis said writedowns for debt instruments known as collateralized debt obligations, or CDOs, is ``unknowable.'' Bank of America's Tier 1 ratio -- a cushion against bad loans that's monitored by regulators -- has declined from 8.22 percent at the end of the third quarter, Lewis said.
``We expect to rebuild Tier 1 capital to our 8 percent target, but with higher capital markets losses and provision expense, we may not now be able to resume buybacks until 2009 instead of the second half of next year as we had hoped,'' Lewis said.
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