Bank of America Corp. faces a 10% jump in uncollectible loans, to $7.6 billion, when it reports second-quarter earnings, according to Credit Suisse.
Bad debts included $1.9 billion tied to home equity, and about 10.4% of credit card loans will be written off, Moshe Orenbuch, an analyst at Credit Suisse, wrote in a report issued Monday.
The banking company charged off $6.9 billion in the first quarter, he said.
B of A will report a per-share profit of 32 cents for the quarter, including a $5.2 billion pretax gain from the sale of China Construction Bank Corp. shares, Orenbuch said.
Excluding that gain and a $750 million assessment to bolster the Federal Deposit Insurance Corp.'s Deposit Insurance Fund, the Charlotte company probably lost 15 cents a share, he wrote.
Stress tests the government conducted in May found that B of A may face $136 billion in loan losses through 2010 in an extended recession. In June the company completed an effort to close the $33.9 billion capital gap found by the stress tests.
Joe Price, B of A's chief financial officer, said on a May 7 conference call that it expected to report increased chargeoffs for the second and third quarters, though at a lower rate than cited in the stress tests. The tests assumed chargeoffs will average $11.4 billion per quarter through the end of 2010, higher than the company's own estimates, B of A said May 7.
