Wachovia, other U.S. banks post dismal results
Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) and Washington Mutual Inc (WM.N: Quote, Profile, Research, Stock Buzz) led several large U.S. banks in posting weak second-quarter results on Tuesday, hurt by soaring losses from mortgages and other debt.
Wachovia reported a $8.86 billion loss, while Washington Mutual said it lost $3.33 billion. Two Ohio-based regional banks, Fifth Third Bancorp (FITB.O: Quote, Profile, Research, Stock Buzz) and KeyCorp (KEY.N: Quote, Profile, Research, Stock Buzz), also posted losses. Southeast regional banks Regions Financial Corp (RF.N: Quote, Profile, Research, Stock Buzz) and SunTrust Banks Inc (STI.N: Quote, Profile, Research, Stock Buzz) each said profit fell.
Wachovia and Regions also slashed their dividends, while Wachovia, Fifth Third and KeyCorp incurred charges from their tax treatment of some lease transactions.
Lenders are suffering as the U.S. housing crisis deepens, making it harder for consumers, businesses and homebuilders to stay current on their loans.
“There is no easy fix,” said Michael Nix, who helps invest $750 million at Greenwood Capital Associates LLC in Greenwood, South Carolina faxless payday loan. “We have to see stabilization in housing and, until we see that, it’s hard to get comfortable.”
Bank shares nevertheless soared after Wachovia said it would not sell common stock to raise capital.
Wachovia shares closed up 27.4 percent, Fifth Third up 11.7 percent, KeyCorp up 4.3 percent, SunTrust up 16.2 percent, Regions up 9.6 percent and Washington Mutual up 6.2 percent.
The KBW Bank Index .BKX rose 8.9 percent and has risen 39.7 percent in the last week. Part of those gains came as Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz), JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) and Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) reported results that were not as bad as investors feared.
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