Bank Of Amer Fincl Chief Sees Future Credit Costs Rising
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By David Enrich
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Bank of America Corp. (BAC) expects to see its credit costs rise as more consumers struggle to pay off their loans, Chief Financial Officer Alvaro de Molina said Thursday.
The climbing costs are expected to come in Bank of America's credit-card division, de Molina said on a conference call with analysts to discuss first-quarter results. That expectation prompted the Charlotte-based bank, the nation's biggest credit card issuer thanks to its purchase of MBNA Corp., in the first quarter to boost its provisions for future losses.
"We fully expect to see some rise in credit costs ahead of us, but we don't know when," de Molina said.
In the first quarter, credit costs were depressed by the steep drop in consumer bankruptcy filings, which followed last year's enactment of a law making it harder for people to wipe away their debts. The pace of bankruptcy filings is widely expected to gradually rebound, but de Molina said he wasn't sure when that would happen.
De Molina also said Thursday that Bank of America will start being more aggressive in building up its deposit base. The company spent the second half of 2005 not competing for some deposits because intense competition was driving up prices and because the bank needed to stay beneath federal market-share caps in order to close its MBNA deal.
"We expect to see a rebound in the growth trajectories," de Molina said.
He also said Bank of America is on track or ahead of schedule in reaching its targets for cost-savings and synergies with the MBNA deal. So far, the company has eliminated about 2,000 jobs, mainly through attrition, de Molina said.
-By David Enrich, Dow Jones Newswires; 201-938-2123; david.enrich@dowjones.com
(END) Dow Jones Newswires
April 20, 2006 10:13 ET (14:13 GMT)
Copyright (c) 2006 Dow Jones & Company, Inc.- - 10 13 AM EDT 04-20-06 |
