Credit concerns over BofA figures

Bank of America beat expectations by posting $4.2bn in first-quarter earnings yesterday, helped largely by Merrill Lynch, the acquisition blamed for the precipitous collapse of BofA's share price over the past six months.

Despite the strong results, BofA shares fell 19 per cent to $8.54 in early-afternoon trading as investors were spooked by the bank's warning of deteriorating credit quality and its swelling provisions for additional credit losses.

“We understand that we continue to face extremely difficult challenges primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment,” said Ken Lewis, BofA chief executive.

For the quarter, Merrill contributed $3.7bn in net income, and BofA also recorded a $1.9bn pre-tax gain on the sale of China Construction Bank shares.