By Joe Rauch and Maria Aspan
CHARLOTTE, N.C./NEW YORK (Reuters) - Bank of America Corp
As with JPMorgan Chase & Co
"The question is, how are they going to generate earnings aside from dropping the reserve to the bottom line?" asked Keith Davis, financial sector analyst at Farr, Miller & Washington.
The Bank of America and Citigroup results came a day after the U.S. Congress passed a sweeping financial reform bill that will curb some lucrative businesses for the banks, such as trading for their own account, and over-the-counter derivatives trading.
"Economic conditions remain challenging and global regulatory frameworks are uncertain," Citigroup Chief Executive Vikram Pandit said in a statement.
Citigroup's net income fell 37 percent, in large part because of a one-time after-tax gain of $6.7 billion in the year-ago quarter. But net income from its investment banking operations declined as well, and much of the quarter's profit came from a lower provision for credit losses and a release of reserves. Those came along with improving credit losses.
Bank of America also reported lower second-quarter earnings, even after it sold $1.1 billion in assets, including its stakes in Latin American banks Itau Unibanco and Santander Mexico
Citigroup shares slumped nearly 2 percent to $4.08 in premarket trading, while Bank of America shares fell 4.4 percent to $14.71.
INVESTMENT BANKING
Revenue at Bank of America's investment bank slumped almost 40 percent, to $6 billion from $9.8 billion in the first quarter. Bank of America has benefited from this unit -- which dramatically increased in size in 2009 after the commercial bank bought troubled investment bank Merrill Lynch & Co Inc -- offsetting losses on its consumer loans.
Citigroup also said its securities and banking revenue fell. The unit had revenue of $6 billion, down 26 percent from the first quarter.
Bank of America reported net income of $3.1 billion, or 27 cents a share, down from $4.3 billion, or 49 cents a share, a year earlier. Analysts had expected 22 cents a share, according to Thomson Reuters I/B/E/S.
Citigroup reported its second consecutive profitable quarter, posting net income of $2.7 billion, or 9 cents a share, down from $4.3 billion, or 33 cents per share, a year earlier. Analysts had expected 5 cents a share, according to Thomson Reuters I/B/E/S.
JPMorgan on Thursday reported a higher-than-expected second-quarter profit of $4.8 billion, up 76 percent from a year earlier.
(Reporting by Joe Rauch and Maria Aspan; additional reporting by Elinor Comlay; editing by John Wallace)
