Quarterly reporting BK was mixed: loss per share was $ 2.04, while the market is expecting earnings of $ 0.44. However, most of the loss was caused by the restructuring of the portfolio of investment securities, and adjusted profit was 20% better than expected, amounting to $ 0.55. In addition to all at 5% proved to be better than expected earnings and the bank.

The purpose of restructuring the portfolio of investment securities - is basically selling a significant proportion of bonds (bank took advantage of the rising cost of these instruments), reducing risks to business. In addition, significantly reducing the risks to the balance sheet the bank, also decreases and the volatility of future profits, which can reduce the volatility of the quotation and the Bank, as well as improve the comparability of earnings with normalized income of the bank. It is worth noting that the sale of bonds will not have a significant negative pressure on the bank's capital and in the near future a positive impact on net interest income of the issuer, with a large amount to $ 0.07-0.09 per share.

bank's commission income rose by 4% compared with the II quarter of 2009, although it was lower by 15% when compared to the same quarter last year. In III quarter of this was due to growth of investment income, income from asset management and other income, which blocked the drop in income from repos due to narrowing spreads in the market.

Reserve to cover the problem assets was at $ 147 million, slightly above market expectations, but management said that these costs will be reduced in the future.

Bank's capital adequacy is quite acceptable values. Capital Adequacy Level 1 is 11.3%, and total capital adequacy (capital adequacy ratio) is 15.2%. Taking into account the unloading of the balance of their troubled assets, as well as less risky balance sheet structure in comparison with other banks, this value, from our point of view, more than enough.

In general, the report BK produced a positive impression on us. We believe that shares of BK - a good investment, growth potential is on the horizon of 12 months, according to our calculations, is about 25%, which is higher than for most other U.S. financial institutions. We believe that the bank faster than the other achieve its normalized level of income is significantly less risk than most other U.S. financial institutions, by virtue of their specialization. All this is likely to lead to the fact that in the next few quarters the bank will demonstrate the dynamics better than the bank index in general.

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