SAN FRANCISCO, JULY 23 -- BankAmerica Corp. today reported that it lost $1.14 billion in the second quarter, mostly because of its decision to set aside an additional $1 billion to cover possible loan losses in the developing world.
The nation's second-largest banking company, whose principal subsidiary is Bank of America, said the loss in the second quarter compares with a $640 million loss posted in the second three months of 1986.
San Francisco-based BankAmerica lost $1 billion in the first six months of the year, compared with a loss of $577 million in the first half of 1986.
The banking company had predicted a second-quarter loss of $1.1 billion when it announced its decision to boost its loan loss reserves on June 9.
BankAmerica's downturn in the second three months of the year caps what has been a bleak financial quarter for the nation's banks.
Earlier this week, New York-based Citicorp, Manufacturers Hanover and Bankers Trust reported losses for the second quarter, largely because of similar decisions to boost loan reserves in anticipation of future Third World debt problems.
"Our results, like those of other major U.S. banking institutions, reflect the impact of significant increases in the allowance for credit losses related to developing country debt," BankAmerica Chairman A.W. Clausen said.
"Raising our allowance for credit losses this quarter should not affect BankAmerica's fundamental recovery. The $1.1 billion addition to our allowance does not alter our primary capital ratio, which continues to increase."
BankAmerica's stock was down 25 cents to $10.75 a share in midday trading on the New York Stock Exchange.
Clausen cited improvement in BankAmerica's credit losses, which declined for a third consecutive quarter, and a decrease in nonperforming loans.
"Although it was necessary for us to substantially increase the allowance for credit losses during the second quarter, we are pleased that net credit losses and nonaccrual loans are down, personnel costs have declined, and our primary capital ratio has increased," Clausen said.
Brazil's continued inability to pay interest on its medium- and long-term debt cost BankAmerica $38 million in net income for the second quarter.
But the sale of the banking company's West German credit card operations and its consumer trust division, Bankhaus Centrale Credit A.G., netted it $102 million during the second quarter.
The company reported net interest income on a taxable-equivalent basis of $811 million, down 17 percent from $982 million in the second quarter of 1986.
The banking company reported total assets of $97 billion as of June 30, down from $117 billion a year ago.