Bank of America profits up as credit improves

Bank of America has reported stronger-than-expected profits for the fourth quarter of 2013, helped by improving credit conditions.

The second largest US bank reported net income of $3.4bn (£2.08bn), up from $732m a year earlier.

The increase was largely due to a big reduction in the amount the bank set aside to cover bad debs.

Its provision for credit losses fell to $336m, compared with $2.2bn in the fourth quarter of 2012.

Revenue in the quarter rose to a better-than-expected $22.32bn, up from $19.6bn a year earlier.

"We enter this year with one of the strongest balance sheets in our company's history," said the bank's chief financial officer, Bruce Thompson.

"Capital and liquidity are at record levels, credit losses are at historic lows, our cost savings initiatives are on track and yielding significant savings, and our businesses are seeing good momentum."

Losses at the bank's consumer mortgage business, which was hit hard by the collapse of the housing market in the financial crisis, narrowed in the quarter. The unit lost $1.1bn, compared with a $3.7bn loss a year earlier.