Profit falls at Bank of America

A slumping housing market has hit Bank of America

The US's largest retail bank, Bank of America, has reported its fourth quarterly profit decline in a row.

The firm was hit by an increase in bad debts associated with the slump in the housing market and economic slowdown.

Second quarter profit fell to $3.41bn (£1.7bn) from $5.76bn a year earlier but the results beat expectations, sending shares higher.

Results included $212m of merger costs, but not the cost of merging with Countrywide Financial, bought in July.

Chief executive Kenneth Lewis said the bank had produced "solid results in a difficult financial environment," with good results in nearly all its sectors not associated with property.

Shares in the firm rose 3.9% to $28.56 by close of trade as the earnings were better than forecast.

Signs of hope?

Bank of America acquired Countrywide Financial, the US's biggest mortgage lender, in a deal worth $2.5bn.

The bank said its purchase of Countrywide, once the nation's largest mortgage lender, would add to profit faster and result in deeper cost cuts than first thought.

"It suggests the credit crisis isn't as bad as people thought" for lenders, said Steve Roukis, managing director at Matrix Asset Advisors .

"A week ago there was tremendous fear about systematic risk to the system. There's definitely a floor here."