Bank of America has reported a big increase in troubled loans in the first three months of this year, though its purchase of Merrill Lynch helped it to more than double profits.
While the results beat analysts' forecasts, they were boosted by once-off items, including a $1.9 billion gain from selling shares of China Construction Bank Corp and $2.2 billion of gains tied to widening credit spreads. Troubled loans came to $25.74 billion, up 41% from the same figure three months earlier.
The results are seen as unlikely to stem calls for chief executive Kenneth Lewis to go or to give up the post of chairman of the largest US bank, which has taken $45 billion of federal bail-out money.
Net profits rose to $2.81 billion from $1.02 billion a year earlier. Net revenue more than doubled to $35.76 billion. Before the impact of preferred stock dividends, net income more than tripled to $4.25 billion from $1.21 billion.
Lewis faces intense pressure over the Merrill purchase, which shareholders approved before learning of big losses at Merrill that would prompt a government bail-out.
Bank of America has also infuriated regulators over its handling of $3.62 billion of bonuses awarded to Merrill workers, and the bank's share price has fallen by more than two-thirds since the merger was announced in September.
The bank also faces investor lawsuits over its purchases of Merrill and the mortgage lender Countrywide Financial Corp.
Its credit quality deteriorated broadly as the economy weakened, housing prices fell and unemployment rose. Bank of America set aside $13.38 billion for credit losses in the quarter, up from the fourth quarter's $8.54 billion. The bank's credit card business lost $1.77 billion in the quarter.
'We continue to face extremely difficult challenges, primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment,' Lewis said.
