Bank of America profit up, stock down

Bank of America stock over a year

The U.S. bank that stepped up to buy two major distressed U.S. financial institutions last year reported strong first-quarter profit.

But shares of Bank of America Corp. fell nearly 20 per cent Monday, despite the profit, after the bank also warned about the weakening U.S. economy.

The stock closed down $2.58 US, at $8.02, in trading in New York.

"We understand that we continue to face extremely difficult challenges, primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment," chairman and CEO Kenneth Lewis said.

The bank disclosed that it had $25.7 billion US in non-performing assets, more than triple the $7.8 billion in the 2008 first quarter. The bank said it added $6.4 billion to its loan loss reserve.

Bank of America took over investment dealer Merrill Lynch effective Jan. 1 and Countrywide Financial, the mortgage lender that was heading for failure, last year.

The bank said profit for the three months ended March 31 was $2.8 billion (44 cents a diluted share), compared with $1 billion (23 cents).

Revenue in the recent quarter, boosted by the acquisitions, was $35.8 billion, compared with $17.1 billion.