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Dark clouds clearing at Bank of America

BANK of America said fourth quarter losses narrowed to $194m (£120m) yesterday as haemorrhages from its consumer credit portfolios slowed.

A one-off hit for exiting the US government’s Tarp scheme brought the net fourth quarter loss to $5.2bn, however, or 60 cents per share. The impact of the $4bn charge produced a net full-year deficit of $2.2bn, Bank of America’s first for more than two decades.

The acquisition of Merrill Lynch boosted quarterly revenues 59 per cent to $25.4bn. It also combined with a more favourable trading environment than 2008 to bring net income from Bank of America’s global markets unit back into the black with $4.8m.

Consumer loan write-downs slowed towards the end of the year, but severe losses came from Bank of America’s global credit cards division throughout 2009. At $5.6bn the bank experienced the heaviest shortfall of the six largest US card lenders as customers struggled to find the money to pay back their debts.

New chief executive Brian Moynihan, who has promised a “DNA change” as the group settles down and integrates Merrill Lynch, said it was “disappointing” to incur a loss in the fourth quarter.

He added: “As we look at 2010, we are encouraged by signs the economy is improving, as we have seen in the stabilisation of our credit costs, particularly in the consumer businesses. That said, economic conditions remain fragile and we expect high unemployment levels to continue, creating an ongoing drag on consumer spending and growth.”

Analysts said frothy investment banking returns had helped offset areas of weakness, but warned investment banking revenues were likely to be volatile in the coming year and could not be depended upon. Bank of America shares closed up one per cent at $16.49.