Bank of America Corp. cited higher credit costs in the weak economy for much of the $1.77 billion net loss by its global card services business during the first quarter, which ended March 31. Card services net income was $867 million during the first quarter last year. BofA increased its provision for credit card loan losses to $8.22 billion during the quarter, nearly double the $4.31 billion provision for card losses during the same period a year earlier. The issuer charged off 8.62% of managed card receivables during the quarter, up 343 basis points from 5.19% of receivables in the first quarter of 2008. Credit card losses now represent almost half of BofA's total consumer portfolio losses, Joe Price, BofA chief financial officer, told analysts during a conference call this morning. BofA expects card charge-offs to worsen, with the net loss ratio on consumer credit cards exceeding rising unemployment rates by "at least 100 basis points," Price warned investors. The issuer managed an average of $178.49 billion in credit card loans during the quarter, down 2.8% from $183.69 billion a year earlier. Credit card purchase volume was $48.06 million, down 19.7% from $59.82 in the first quarter of 2008. Purchase volume on BofA debit cards was $51.13 million, down 2.1% from $50.06 million a year prior.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry