Bank of America, the second-largest US bank, has reported that its first-quarter profit fell 77%, hurt by trading losses and a $3.3 billion increase in reserves for credit problems.
Net profit fell to $1.21 billion, or 23 cents per share, compared with $5.26 billion a year earlier. The results were below analysts' expectations. Net revenue dropped 6% to $17 billion.
The results included $170m of merger and restructuring charges and a $776m gain from credit card network Visa's flotation last month.
'These results clearly did not meet our expectations,' chief executive Kenneth Lewis said in a statement. 'The weakness in the economy and prolonged disruptions in the capital markets took their toll.'
Results included $1.31 billion of trading losses. This reflected write-downs of $1.47 billion related to collateralised debt obligations, or bonds backed by risky loans. Bank of America also said it set aside $6 billion for credit losses, hurt by credit costs in residential mortgage, small business and homebuilder portfolios.
Profit in consumer and small business banking fell 59% to $1.09 billion. The corporate and investment bank saw profit fall 92% to $115m. In wealth and investment management, profit fell 54% to $228m.
Bank of America generates more of its business in the US than rivals such as Citigroup and JPMorgan, exposing it more to weak economic conditions in the country.
