BBC News
Bank of America saw net income soar to $4.2bn (£2.9bn) in the first three months of 2009 from $1.2bn a year earlier, beating analysts expectations. But its results were inflated by its purchases of Merrill Lynch, which added $3.7bn in net income, and Countrywide, which boosted its mortgage arm. And the biggest US bank also had to set aside $13.38bn to cover credit losses, up from the fourth quarter's $8.54bn. Its shares fell 12.5% to $9.28 in the first hour of Wall Street trading.
Analysts said the fall followed investors looking beyond the bank's profit to the continuing concerns about the impact of the financial crisis on the banking system. 'Healthy number' Bank of America has received $45bn in government funds as part of the Treasury Department's $700bn financial rescue package. "We understand that we continue to face extremely difficult challenges," said Bank of America's chief executive Ken Lewis.
Mr Lewis has been under intense pressure over the purchase of Merrill - which was approved before shareholders learned of huge losses at the investment bank, and before billions of dollars worth of bonuses were paid to Merrill employees. Bank of America also said that Countrywide and Merrill had contributed "outstanding performances". Analyst Michael Holland of Holland and Company in New York said the headline figure was "a really really healthy number given where expectations were just a few months ago".
Improving reports
The results beat analysts' forecasts and add to signs that the banking sector might be improving. Last week rival Citigroup reported its first quarterly net profit in nearly two years. Citi's results came soon after positive earnings reports from Wells Fargo, Goldman Sachs and JP Morgan.
In January Bank of America was granted $20bn in fresh US government aid and $118bn worth of guarantees against bad assets. It has also benefitted from selling shares it held in China Construction Bank.
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