The Bank of America (BoA) has delivered a strong first quarter result but warned that credit conditions will get worse before they get better.
The United States’ largest bank said its net income in the first quarter more than tripled to US$4.24 billion (A$6 billion) in the quarter, compared to US$1.21 billion (A$1.7 billion) one year ago.
But despite strong income the bank said a surge in bad loans had forced it to set aside US$13.4 billion (A$19.2 billion) to cover credit losses, The Guardian reported.
"Make no doubt about it, credit is bad and we believe credit is going to get worse before it will eventually stabilise and improve," BoA chief executive Ken Lewis said.
Wall Street plunged off the back of the news as investors grew concerned about the prospects of rising bad debts.
The Dow Jones fell 289.60 points, or 3.6 per cent, to 7841.73 – the steepest one-day point loss since March 2.