Boston, MA 10/18/2013 (wallstreetpr) – Bank of America Corp (NYSE:BAC) reported good 3Q13 results on back of improving credit quality, reduction in costs and overall favorable credit conditions. Earnings were up at $0.20 per share, revenues showed positive growth at $21.7 billion, and the average deposit balances were highest in many years at $522 billion. The consumer and business banking divisions showed good growth of 32% over the same period last year. The revenues for this division were $7.52 billion. Cost control measure taken by the bank were showing results, and the bank decided to carry them forward. The bank shed 3.5% of its employee strength in the last quarter. The bank is also promoting the use of mobile banking among its consumers and estimates that the customer base now stands at 14 million active users. Mobile banking is useful to both the bank and its customers. It allows the bank to reduce tellers, branches and ATMs. This leads to a reduction in transaction costs. The customers can avail of the banking services from anywhere at any time. They can check their balances and pay their bills using this facility.
Mortgage space is still a cause of worry. Though Bank of America does not focus on this segment alone, it affects all aspects of the business scenario. There has been a sharp decline in delinquent mortgages and residential foreclosures leading to improved credit quality. The growth in this segment has fallen. The top five banks reported a fall of 21% in mortgage loans over the same period last year. Accounting all the companies in this segment, the decline could be more than 35%, according to some analysts. Hedge funds have bought many of the foreclosed loans from funding provided by banks. The hedge funds were betting on rental incomes. Rental space is already facing a glut.
The overall effect of falling mortgage credit on the macro economy remains to be seen. Bank of America may not be directly affected by the fall but may feel the aftereffects soon
