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Bank Of America Earmarks $13.4bn For Bad Loans

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Bank of America set aside $13.38 billion for bad loans for a second straight quarter, and net charge-offs totaled $8.7 billion, up 25 percent from the prior three-month period.

Total reserves increased $4.63 billion to $35.78 billion, and nonperforming assets surged 21 percent to $30.98 billion.

“It was expected to be difficult in the quarter, and it is,” said Richard Bove, an analyst at Rochdale Securities in Lutz, Florida.

Credit cards were a big trouble spot. The bank said it is not collecting payments on 11.73 percent of its $169.8 billion card portfolio, up from 8.62 percent three months earlier.

“We have a really ugly economic backdrop,” Michael Holland, a money manager at Holland & Co in New York, said on Reuters Television. “Those numbers aren’t going to go away soon.”

Still, Lewis said the bank expects to boost reserves more slowly, as consumer charge-offs perhaps peak around year end.

The bank announced results just before Citigroup Inc, whose difficulties are considered more severe, posted a quarterly loss excluding a big gain from a brokerage joint venture with Morgan Stanley.

Goldman Sachs Group Inc and JP Morgan Chase & Co posted better-than-expected results earlier this week. Like JP Morgan, Bank of America said it has no material exposure to struggling business lender CIT Group Inc.

In afternoon trading, Bank of America shares fell 29 cents, or 2.2 percent, to $12.88 on the New York Stock Exchange.

But many of the Bank’s problems relate to its takeover of Merrill, after less than 48 hours of negotiations.

Lewis considered scrapping the deal as Merrill’s losses soared, but completed it after then-U.S. Treasury Secretary Henry Paulson threatened to oust management, fearing a cancellation would threaten the financial system.

According to The Wall Street Journal, regulators have placed Bank of America under special secret oversight to address problems with risk and liquidity management.

Shareholders in April stripped Lewis of his chairman role, and Bank of America has since installed several directors with banking or regulatory experience.

Congress, meanwhile, is investigating whether Lewis withheld information about Merrill’s problems from investors.

Regulators have barred Bank of America from repaying its $45 billion of bailout money from the Troubled Asset Relief Program, and in May ordered it to build a $33.9 billion buffer to cope with a possible $136.6 billion of losses through 2010.

The bank said it is in early talks with the government about repaying TARP funds, preferably “sooner rather than later” according to Lewis.

Despite the problems, Chief Financial Officer Joe Price told reporters on a conference call that Bank of America is ahead of schedule in realizing $7 billion of merger savings and has made the “lion’s share” of a potential 35,000 job cuts.

He expects within 30 days to resolve whether the bank owes anything under an agreement for the government to share losses on $118 billion of assets. The bank said the agreement, part of a January bailout, was never signed and is not needed.

Price also said the bank is moving into the “contract phase” in its efforts to sell its Columbia asset management unit, and remains in talks with “multiple parties.”

Investment banking posted a $1.38 billion second-quarter profit, though trading revenue fell short of levels posted by Goldman and JPMorgan.

Credit card operations lost $1.62 billion, and Lewis said new credit card rules in 2010 could reduce annual card revenue by $700 million, similar to what JPMorgan expects.

The home lending and insurance business lost $725 million, though mortgage and home equity loans rose to $114.3 billion from the first quarter’s $89.26 billion. Bank of America bought mortgage lender Countrywide Financial Corp last July.

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NGX Digital Investment Platform Gets SEC Approval

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Securities and Exchange Commission (SEC) has approved the Nigerian Exchange Group’s Investment, a digital platform designed to streamline public offerings and rights issues in the capital market.
In a statement made available to newsmen, the NGX noted that the platform was live, promising an efficient, convenient, and seamless experience for managing primary market transactions.
It stated that the platform was built on the success of the country’s first digital public offering in 2021, which attracted over 150,000 new retail investors, with 75 per cent being female and 85 per cent under the age of 40.
It noted that the platform aimed to enhance transparency and accessibility in primary market transactions.
According to NGX, the launch of Invest coincides with the Central Bank of Nigeria’s banking recapitalisation directive, which has led to numerous subscription offers and rights announcements by Nigerian banks.
The organisation disclosed that Access Holdings, FCMB Group, and Fidelity Bank were utilising the NGX Invest APIs to distribute their offerings to retail investors, with more banks in the process of onboarding.
The Drector-General of the Securities and Exchange Commission, Emomotimi Agama, commended the initiative, stating, “The e-offering platform aligns perfectly with our objective of future-proofing the Nigerian capital market.
“By digitalising and automating financial intermediation processes, we are fostering a more efficient, transparent, and inclusive capital market.
“Our focus is on creating an enabling regulatory environment that promotes innovation without compromising compliance or investor protection”.
The Group Chairman of NGX Group, Umaru Kwairanga, praised the regulator, noting, “The supportive regulatory environment has provided a solid foundation that enabled the swift delivery of the platform.
“This reflects our mutual commitment to market development and will undoubtedly contribute to boosting the participation of retail investors in the capital market”.
He added that the integration of technology, strong partnerships, and collaboration, alongside a positive policy environment, would be essential to Nigeria’s economic development.
Also, the Group Managing Director/Chief Executive Officer of NGX Group, Temi Popoola, expressed enthusiasm for the new platform, stressing its significance in NGX Group’s digital transformation journey and its potential to enhance market access and foster economic growth.
“We sincerely appreciate SEC and CBN for their strong support and leadership. Our intermediaries and partners, including the Central Securities Clearing System, have been instrumental in achieving this success”.

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Firm Plans To Tackle Metering Gap With Tech

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Sequel to high electricity tariff, particularly with Band A consumers, a firm, Hexing Nigeria, has said it is committed to providing affordable and renewable electricity for Nigerians.
This was as the firm launched technologies to close Nigeria’s metering gap, reduce line loss, and enhancing the renewable energy landscape.
Hexing, in a statement made available to journalists, noted that it had supplied and installed over 12 million smart devices across different countries.
The company, through its Nigeria representative, Timmy Shi, in the statement, said the company was ready to address Nigeria’s energy poverty and enhance the renewable energy landscape, saying that the firm was proud to be at the forefront of deploying cutting-edge technologies that would revolutionise the renewable energy sector.
”Our latest technologies help to tackle the problem of electricity, especially with the increase in tariffs among Band A users. Using our solar products can reduce their dependence on the national grid.
“We are set up to support local installers, stores and people who are in the solar market space with installation, technological and marketing support.’
“Our focus areas include providing high-quality solar PV panels, inverters, batteries, and energy management systems. These solutions are tailored to meet the unique energy needs of Nigerian households and businesses, promoting the adoption of clean and renewable energy sources”, she noted.
The statement also disclosed that the Vice President of Hexing Group, Simon Ye, said Hexing Nigeria would continue to enhance technologies to combat line loss effectively.
“Hexing’s IoT technology, integrated into most prepaid meters in Nigeria, is specifically designed to combat line loss, by enabling real-time monitoring and management of energy consumption.
“Our IoT solutions detect and prevent unauthorised access and tampering, ensuring that energy distribution remains fair and efficient.
“We are committed to providing accessible and affordable energy and clean water to the people of Africa. Our comprehensive portfolio of solutions includes high-quality solar products, smart water systems, and innovative energy management technologies”, he declared.

Corlins Walter

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Town Planners Lament Shortage Of Professionals

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The Nigerian Institute of Town Planners (NITP) has lamented the acute shortage of town planning professionals in the country.
National President of the institute, Nathaniel Atebije, who disclosed this, said as against having at least one town planner to 3000 residents as it is obtainable in some developed countries, Nigerians could only boast of one town planner to about 70,000 people.
According to him, this has no doubt reduced their visibility across communities in Nigeria and has therefore resulted in haphazard building, and the consequent challenge of flooding among other environmental challenges.
Atebije disclosed this while speaking with journalists during the Southwest Nigerian Institute of Town Planners Town Hall Meeting and Leadership Training held yesterday at the Ogun State secretariat of the association, Leme, Abeokuta.
The three-day programme has as its theme “Creating the Livable Environment We Need Through Collaboration and Community Participation”.
Atebije decried inadequate planning in the country saying it has led to avoidable losses and waste of scarce resources.
He said, “One of the challenges we have in creating a livable environment in Nigeria is that we don’t even have enough professionals. We don’t have enough town planners, architects, engineers, and builders among others.
“Planning is a government job, it is a social responsibility of the government to the people of Nigeria and so they must take the lead. In some other developed countries, we have one town planner to 3000 population but here in Nigeria, one town planner will be to about 70,000 population.
“That is why eyes cannot be everywhere. There are illegal developments everywhere. In fact, they have not engaged enough town planners, either those in the private sector for consultancies, nor do they have enough in the public sector to help in the implementation of their building plans.

 

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