Bank of America (BoA) slid to a $1 billion net loss in the three months to September in the last quarterly results to be announced by Kenneth Lewis, the company’s outgoing chief executive.

BoA’s results were hit by a number of non-core costs, including $402 million it set aside to cover the cost of closing down a Government guarantee on its assets.

The bank also took punishment from the continuing financial difficulties being suffered by consumers.

Net income from deposits plunged by 40 per cent to $798 million compared to the three months to September 30 last year.

BoA’s global card services division made a $1 billion loss and home loans and insurance made a $1.6 billion loss. Profits were also impacted by a $2.6 billion charge which came mainly from an improvement in BoA's creditworthiness, which meant that it would cost more to buy back debt sold by BoA and Merrill Lynch, the investment bank it bought last year. Banks must account for this cost every quarter.

BoA’s first quarterly loss since the fourth quarter last year came despite a 32.6 per cent year-on-year increase in revenue to $26 billion.

Despite the loss in the third quarter, which compares with a $1.1 billion profit in the same period last year, Mr Lewis said: "we are heartened by early positive signs, such as the leveling of delinquencies among our credit card customers.”

Mr Lewis said that deteriorating loans were the bank’s major challenge going forward, echoing comments made by Vikram Pandit, chief executive of Citigroup, who yesterday revealed that the bank made a $101 million net profit despite similar problems with bad debts.

It is a humbling exit for Mr Lewis, who has spend 40 years at the bank and until recently was lauded as a national hero for buying Merrill Lynch, the troubled investment bank, at the height of the financial crisis.

But yesterday Mr Lewis agreed to give up his bonus and salary for 2009, under pressure from President Barack Obama’s Pay Czar. The chief executive will retire at the end of the year. BoA is searching for a replacement.

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