Bank of America Merrill Lynch reveals $1.2 billion loss for Q4

Bank of America Merrill Lynch (BAML) pays $2 billion in goodwill impairment in last quarter, posts dramatic losses for 2010

Bank of America Merrill Lynch (BAML) has announced it lost $1.2 billion over the course of the fourth quarter, 2010.

The US bank says the loss was due to a $2 billion “goodwill impairment” charge paid on its home loans and insurance segments. Otherwise it would have reported profits of $756 million.

Goodwill is an intangible asset included on balance sheets to cover assets that cannot be physically assessed, for example, a strong brand name or customer relations. The impairment is a reflection of the drop in value of those assets at BAML related to the US foreclosures crisis.

Over the year BAML paid $12.4 billion in goodwill impairments, giving it a total loss for the year of $2.2 billion. Without these losses, the bank would have turned a profit of $10.2 billion.

In a statement, chief executive Brian Moynihan said 2010 represented "a necessary repair and rebuilding year", and that results reflect a steady improvement in fortunes for the bank. Excluding the goodwill impairment, the results would have reflected a growth of $4 billion on last year's financial results.

"We enter 2011 with the best customer franchise in the business against a backdrop of an improving economy," said Moynihan, promising that the bank would "return value to shareholders by focusing on customers and clients, continuing to build capital, and executing our strategy".