Bank of America Corp.’s Global Card Services Unit this morning reported an $806 million profit for the second quarter ended June 30; the unit reported a $1.59 billion net loss during the same period a year ago. The issuer attributed the turnaround to declining credit costs and continued improvement in the U.S. economy.
Revenue dropped 5.5%, to $6.86 billion from $7.26 billion, “driven by lower average loans and reduced interest and fee income primarily resulting from the implementation of the CARD Act, partially offset by the $440 million pretax gain” from the sale of BofA’s equity position in MasterCard Inc., BofA said in its earnings release.
The issuer’s provision for credit losses decreased by $3.9 billion from a year ago, to $3.8 billion from $7.7 billion, “as lower delinquencies, decreasing bankruptcies and lower expected losses from the improving economy drove lower charge-offs and reserve reductions during the quarter,” BofA said.
The total consumer credit card managed net loss, as a percentage of average managed card receivables, was 10.16%, down from 11.73% at the end of June 2009.
As a company, BofA reported a net profit of $3.1 billion for the quarter, down 3.2% from $3.2 billion a year earlier. Revenue net of interest expense was $29.2 billion, down 11.8% from $33.09 billion.
