Bank of America suffering "horrific" loan losses

June 15 - Bank of America Corp (BAC) is now experiencing "horrific" loan losses, analyst Richard Bove said, adding that the largest U.S. bank may set aside loan loss provisions of $46 billion this year.

"In the second quarter, its (Bank of America's) position as the largest lender in multiple sectors of the American financial system will haunt the company as its losses expand," the Rochdale Securities analyst wrote in a note to clients.

Analyst Bove, however, raised his price target on the bank's stock by $5 to $19, saying confidence in the company and in its management was improving.

It is also becoming increasingly apparent that the acquisition of Countrywide and Merrill Lynch has been good for the company, Bove said.

These two businesses may have provided the bulk of the company's positive results in the current quarter as the core business continues to suffer due to its poor underwriting practices, he said.

In addition, calls for Chief Executive Kenneth Lewis' resignation may now begin to subside as the company's stock continues to move higher, Bove said.

"It is now being conceded, by even the most bearish observers, that claims that the industry was insolvent were incorrect and, therefore, banking will survive and possible thrive," he said in a note to clients.

Source: Reuters

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