Bank of America Corp. may report a $3.6 billion fourth-quarter loss and again slash its quarterly dividend, Citigroup Inc. analyst Keith Horowitz wrote Monday.
The Charlotte company is likely to report a loss of 75 cents a share, compared with an earlier estimate of a profit of 2 cents a share, Mr. Horowitz wrote in a note to clients.
B of A may reduce its dividend to 5 cents a share, from 32 cents, he said.
On Monday the company's shares closed down 12%, at $11.43.
B of A may have cumulative losses of $165 billion from 2008 to 2011, Mr. Horowitz wrote. "So far, about 33% have been taken either through loan-loss provision or purchase accounting marks."
About one-third of the predicted losses, or $57 billion, will probably come from credit card lending and about $29 billion from home loans made by Countrywide Financial Corp., he wrote.
The company's acquisition of Merrill Lynch & Co. poses both credit and integration risks for B of A, which projects $7 billion of annual cost savings from the merger, Mr. Horowitz said in the report.
He estimated that investment banking revenue would fall 35% this year from 2008 levels and that wealth management revenue would fall 20%.
"Clearly there is a lot of cultural risk in this deal," Mr. Horowitz wrote, "plus it adds a great deal of complexity to the franchise, which is only heightened in this challenging market."
B of A is scheduled to announce its fourth-quarter results Jan. 20. The average of analysts' estimates calls for a profit of 19 cents per share.
Mr. Horowitz rated the lender's stock a "buy," compared with "hold" ratings for competitors JPMorgan Chase & Co., Wells Fargo & Co., and U.S. Bancorp, whose shares have outperformed Bank of America's in the past 12 months.