Credit loss hits Bank of America

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Bank of America's quarterly profits have fallen 32%, after an investment banking slowdown and credit losses.

The worse-than-expected profits hit $3.7bn (£1.8bn) in the three months to 30 September, from $5.42bn in the same period a year earlier.

Earnings from its investment banking business fell 93%, following turmoil in the financial markets, the firm said.

Other banks, including Citigroup and JP Morgan, have also seen profits hit following credit and mortgage losses.

'Volatility'

Bank of America has reserved $2.03bn for credit losses, marking a 73% rise from 2006.

Speaking to analysts, the firm's chief executive, Kenneth Lewis, said the earnings for the quarter "were not acceptable".

"We believe we should have performed better," he added.

The firm's credit-card business - the largest in the US - saw profits down 16% to $2.45bn.

"Bank of America earnings play up concerns about the health of the financial sector and suggest we are likely to see fall-out from market volatility," said analyst Omer Esiner, at Ruesch International.

The latest figures come after the three largest US banks, including Bank of America, said they would buy up billions of dollars of troubled investments that have seen their value drop in the wake of the global credit crunch.

The banks - which also included Citigroup and JP Morgan - made the move in a bid to increase confidence in the market for short-term and sub-prime debt and to stop a further sell-off of such investments.

The size of the fund was not made public, but reports suggested it was about $80bn.