Bank of America Corp.’s Global Card Services unit on Oct. 19 reported a net loss of $9.87 billion for the third quarter ended Sept. 30; the issuer reported a $955 million loss during the same period last year. This past quarter’s loss includes a $10.4 billion goodwill-impairment charge that did not exist in 2009’s third quarter.
The goodwill charge results from the limits to be placed on debit interchange fees under the financial-reform legislation enacted in July, which will reduce future revenues in the Global Card Services business. “The charge to goodwill slightly exceeds the ($7 billion to $10 billion) estimated range we announced in July because we refined certain model assumptions,” Charles Noski, BofA executive vice president and chief financial officer, told analysts during a conference call. “While it represents approximately 50% of the goodwill carried in the card-services segment, it is 25% of book value, roughly $40 billion down to $30 billion.”
The card unit’s revenue net of interest expense during the quarter totaled $5.7 billion, down 21.4% from $7.25 billion. Noninterest card income totaled $1.88 billion, down 13.8% from $2.18 billion.
The provision for credit losses fell 53.4%, to $3.18 billion from $6.82 billion.
The credit card charge-off rate for the quarter was 9.12%, down 378 basis points from 12.9% a year earlier. Total charge-off losses during the quarter were $3.27 billion, down 221% from $5.48 billion.
The percentage of loans 30 to 89 days delinquent was 5.43%, down 192 basis points from 7.35%; the percentage 90 or more days delinquent was 2.84%, down 92 basis points from 3.76%
As of the end of September, BofA deployed 17,929 ATMs, down 1.8% from 18,254 a year earlier. The bank’s debit cardholders spent $58.33 billion during the quarter, up 6.5% from $54.76 billion.
As a company, BofA reported a net loss of $7.3 billion; excluding the goodwill charge net income was $3.1 billion. The company reported a $1 billion loss during last year’s third quarter. Total revenues net of interest expense were $26.98 billion, up 2.3% from $26.37 billion.
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