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<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published March 14, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>BOA in the black, says CEO
Bank will ride out the recession without new help from US taxpayers, he adds
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</TD></TR><TR class=caption><TD>MR LEWIS
Sees BOA making US$50 billion in 2009 before taxes, credit losses and writedowns, and says it would likely post a net profit </TD></TR></TBODY></TABLE>BANK of America Corp (BOA) has been profitable in January and February and should be able to ride out the recession without new help from US taxpayers, chief executive Kenneth Lewis said on Thursday.
Mr Lewis joined Citigroup's Vikram Pandit and JPMorgan Chase & Co's Jamie Dimon among CEOs to say their banks were in the black this year.
He also said his bank,the largest in the US, will make money for all of 2009, after reporting its first quarterly loss in 17 years for the October-to-December period.
Mr Lewis said the bank could make US$50 billion in 2009 before taxes, credit losses and writedowns, and would likely post a net profit, especially if businesses and consumers spend more. Early signs of recovery would likely come from housing, he predicted. 'I actually think the next six months is going to be, in a positive way, a gut-wrenching time,' Mr Lewis told an audience at the Chief Executive Officers Club of Boston. 'We're going to start seeing signs of improvement and, at some point, you have to pull the trigger on that investment or that expansion.'
Analysts, on average, expected BOA to lose three cents per share in the first quarter and turn a profit of 60 cents per share in 2009, according to Reuters Estimates. In afternoon trading, BOA shares soared US$1.04, or 21 per cent, at US$5.97, although they remain well below their US$14.08 level at the start of the year.
In his speech to the CEO club, Mr Lewis said it would be a 'nightmare' for US banks to be nationalised, wiping out shareholders and perhaps bondholders, and further damaging an economy that might begin to recover as soon as this year.
Mr Lewis also said he is confident the bank will pass a pending government 'stress test' and will not need more taxpayer money. It took US$45 billion from the US Treasury Department's Troubled Asset Relief Programme (TARP), including US$20 billion in a January bailout to help absorb Merrill.
Mr Lewis touched on two areas that have drawn fire from politicians and banking industry critics: executive pay and sponsorships of sports teams. He said it is wrong to require TARP recipients to cap pay of executives who are just below the top level and produce high amounts of revenue. He said they could be lured by foreign banks or boutique firms not subject to such limits.
He also said BOA's extensive sports marketing efforts generate US$3 of profit and US$10 of revenue for every dollar spent. BOA is the official bank of Major League Baseball and Nascar, and has the naming rights to the stadium for the Carolina Panthers football team in its hometown of Charlotte. -- Reuters
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>BOA in the black, says CEO
Bank will ride out the recession without new help from US taxpayers, he adds
<TABLE class=storyLinks cellSpacing=4 cellPadding=1 width=136 align=right border=0><TBODY><TR class=font10><TD align=right width=20>
</TD><TD>Email this article</TD></TR><TR class=font10><TD align=right width=20></TD><TD>Print article </TD></TR><TR class=font10><TD align=right width=20></TD><TD>Feedback</TD></TR></TBODY></TABLE>(Boston)
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</TD></TR><TR class=caption><TD>MR LEWISSees BOA making US$50 billion in 2009 before taxes, credit losses and writedowns, and says it would likely post a net profit </TD></TR></TBODY></TABLE>BANK of America Corp (BOA) has been profitable in January and February and should be able to ride out the recession without new help from US taxpayers, chief executive Kenneth Lewis said on Thursday.
Mr Lewis joined Citigroup's Vikram Pandit and JPMorgan Chase & Co's Jamie Dimon among CEOs to say their banks were in the black this year.
He also said his bank,the largest in the US, will make money for all of 2009, after reporting its first quarterly loss in 17 years for the October-to-December period.
Mr Lewis said the bank could make US$50 billion in 2009 before taxes, credit losses and writedowns, and would likely post a net profit, especially if businesses and consumers spend more. Early signs of recovery would likely come from housing, he predicted. 'I actually think the next six months is going to be, in a positive way, a gut-wrenching time,' Mr Lewis told an audience at the Chief Executive Officers Club of Boston. 'We're going to start seeing signs of improvement and, at some point, you have to pull the trigger on that investment or that expansion.'
Analysts, on average, expected BOA to lose three cents per share in the first quarter and turn a profit of 60 cents per share in 2009, according to Reuters Estimates. In afternoon trading, BOA shares soared US$1.04, or 21 per cent, at US$5.97, although they remain well below their US$14.08 level at the start of the year.
In his speech to the CEO club, Mr Lewis said it would be a 'nightmare' for US banks to be nationalised, wiping out shareholders and perhaps bondholders, and further damaging an economy that might begin to recover as soon as this year.
Mr Lewis also said he is confident the bank will pass a pending government 'stress test' and will not need more taxpayer money. It took US$45 billion from the US Treasury Department's Troubled Asset Relief Programme (TARP), including US$20 billion in a January bailout to help absorb Merrill.
Mr Lewis touched on two areas that have drawn fire from politicians and banking industry critics: executive pay and sponsorships of sports teams. He said it is wrong to require TARP recipients to cap pay of executives who are just below the top level and produce high amounts of revenue. He said they could be lured by foreign banks or boutique firms not subject to such limits.
He also said BOA's extensive sports marketing efforts generate US$3 of profit and US$10 of revenue for every dollar spent. BOA is the official bank of Major League Baseball and Nascar, and has the naming rights to the stadium for the Carolina Panthers football team in its hometown of Charlotte. -- Reuters
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