Profit drop at Bank of America

Profits have dropped at Bank of America amid concerns about mounting losses on large corporate loans.

However Citigroup, which has financial services operations in more than 100 countries, reported a healthy jump in fourth quarter profits.

The US's biggest banks have been hit by a string of interest-rate increases by central bank, the Federal Reserve, stunting growth at some companies and causing them to miss debt payments.

There are also concerns that Bank of America could be under pressure for its exposure to large, troubled California utilities, which face possible bankruptcy.

Shares up

"Bank of America's results were fraught with credit-quality deterioration and poor results out of trading and venture capital, but otherwise no particular surprises," said Diane Glossman, an analyst at UBS Warburg.

Bank of America's profits fell 27% to $1.39 billion, or 85 cents a share, from $1.09 billion, or $1.10 a share, a year earlier.

Citigroup's profits rose 11% to $3.33 billion, or 65 cents a share, from $3.0 billion, or 58 cents a share, in the 1999 fourth quarter.

Both banks' stocks rose slightly on the news.

In addition to commercial banking, Bank of America is also involved in underwriting, brokerage and asset-management businesses.

It has about 4,400 branches in 21 states.

Salomon Smith Barney

Citigroup's global consumer group performed particularly well, with profits rising 25% in the fourth quarter, to $1.47 billion.

But the fourth-quarter stock market slump hampered growth at its Salomon Smith Barney securities unit, which helps companies with new stock offerings and mergers.

Profits at this division fell 13%, to $716 million, amid an industry-wide slowdown, Citigroup said.

The decline came as Nasdaq posted the worst performance in its history last year, curtailing customers' trading activities and forcing companies to cancel planned stock offerings.

Problems in Bank of America's corporate loan portfolio hurt quarterly results, the bank said.

Californian utilities

Bank of America's chief financial officer, James Hance Jr refused to quantify the bank's exposure to the California utilities.

But he said its total global utility exposure was $5bn and the California companies made up a small portion of that.

California utilities face possible bankruptcy because their costs have soared while the state's electricity deregulation has blocked them from raising prices.