Oct. 16 (Bloomberg) -- Bank of America Corp. plans to overhaul its credit-card business after the unit posted five straight quarterly losses totaling $4.7 billion with no sign of profit ahead.

“We have a lot of people looking at the business and looking at the changes that need to be made both in infrastructure and other ways we can make money,” Chief Executive Officer Kenneth D. Lewis told analysts today after the Charlotte, North Carolina-based bank posted its second quarterly loss in less than a year.

The recession and rising U.S. unemployment have compounded losses at Bank of America, the second-biggest U.S. card lender. Losses grew to $1.04 billion in the third quarter from $167 million in the same period last year, the bank said today, and executives told analysts consumer defaults won’t peak until the economy improves.

“A lot of people are having trouble making money in credit cards, and that is going to put a lot of pressure on the banks,” said Paul Miller, an analyst with FBR Capital Markets Corp. JPMorgan Chase & Co., the biggest U.S. card lender, is predicting more losses next year, “and Bank of America’s credit performance is much worse than theirs,” Miller said.

Annualized card write-offs in September were 14.25 percent at Bank of America as payments at least 30 days overdue rose to 7.53 percent, the highest among the six issuers that reported data on securitized loans yesterday.

The bank said today that delinquencies on all card loans, including those kept on its own books, declined from the second period when measured over the entire quarter.

“We continue to be cautiously optimistic that delinquency trends signal a stabilization in losses,” Chief Financial Officer Joe Price said during the conference call with analysts.

Profit Outlook

Bank of America bought MBNA Corp. in 2006 for $35 billion to gain what had been the top market share among U.S. card lenders. Lewis didn’t provide specifics when KBW Inc.’s Jefferson Harralson asked today if the CEO could comment on when the card division might return to profitability, and what changes investors should expect.

“I can’t,” Lewis said, adding that new federal rules make it harder to charge customers based on risk. “It’s premature to tell you what it’s going to look like in any exact form, but it is going to be different. We acknowledge that and we’re working on it.”

Dimon’s Forecast

JPMorgan said losses in the division were $700 million in the third quarter and the New York-based bank expects them to widen in 2010.

“We know we are going to lose a lot of money next year in cards and it could be north of $1 billion in both the first and quarter and the second quarter,” JPMorgan CEO Jamie Dimon said in an Oct. 14 conference call with investors after the New York-based bank reported third-quarter profit climbed almost sevenfold.

Credit-card losses for U.S. issuers could total $82.4 billion, almost a quarter of all loans, if write-offs reach 18 percent to 20 percent, the Federal Reserve said May 7 after stress tests on 19 lenders, including Bank of America.

Analysts including Moshe Orenbuch of Credit Suisse Group AG said he doesn’t expect credit-card profit to return until the jobs outlook improves. Defaults typically track the U.S. unemployment rate, which climbed to 9.8 percent in September, the highest since 1983.

Credit-card write-offs rose to a record 11.49 percent in August, as measured by Moody’s Investors Service. While Moody’s forecast losses will peak at 12 percent to 13 percent in mid- 2010, Orenbuch said a recovery is more than a year away.

“There is still a lot of heavy lifting to do in the credit-card space,” Gary Townsend, CEO of Hill-Townsend Capital LLC, said today in an interview with Bloomberg Television.

To contact the reporter on this story: Peter Eichenbaum in New York at peichenbaum@bloomberg.net

Last Updated: October 16, 2009 15:40 EDT