BofA Card Income Falls 25 Percent on Credit Costs

Bank of America today reported its third quarter net income fell 32 percent to $3.7 billion from $5.4 billion in the third quarter of 2006. Revenue fell 12 percent from $18.5 billion a year ago to $16.3 billion.

Much of the drop was due to a $1.3 billion, or 93 percent, decline in earnings in the bank’s Global Corporate and Investment Banking division, according to BofA. The retail division fared better with deposits rising 4 percent or $16.5 billion, and debit card purchase volume rising 11 percent.

The provision for credit losses was increased to $2.0 billion from $1.2 billion a year ago. Net charge offs were $1.6 billion, up from $1.3 billion. Total managed net losses were $2.8 billion, compared with $2.2 billion.

The Card Services group saw its managed net revenues rise 6 percent to $6.5 billion, though net income fell 25 percent to nearly $1.1 billion due to an increase in credit costs. BofA reported that “card losses stabilized and declined from the second quarter,” of 2006. The managed credit card net losses were $2.0 billion, compared with $1.7 billion. The managed credit card net losses as a percent of average card receivables was 4.67 percent compared with 4.23 percent.