Bank of America said this today its fourth-quarter profit sank 95 per cent on the back of more than $7 billion of losses.
Net income for the second-largest US bank fell to $268 million, or 5 cents per share, from $5.26 billion, or $1.16, a year earlier.
Bank of America shares fell $1.97, or 5.5 per cent, to $34 in pre-market trading. Results reflected $5.44 billion of trading losses, compared with a year-earlier profit of $460 million.
This reflected a $5.28 billion write-down related to collateralised debt obligations, which the bank said reduced trading profit by $4.5 billion and other income by about $750 million.
Bank of America set aside $1.74 billion for credit losses, including a $1.33 billion addition to reserves.
It also incurred $800 million of losses and write-downs to help some money market mutual funds exposed to risky debt maintain the $1 per share net asset value that all such funds try to keep.
"We certainly are not pleased with our performance," chief executive Kenneth Lewis said. "We are cautiously optimistic about 2008, though we believe economic growth will be anaemic at best in the first half."
Last week, Bank of America set plans to cut 650 jobs in its markets and investment banking unit.