Bank of America Corp., the second—largest U.S. bank, said profit dropped for a third straight quarter as the company set aside $6.01 billion for bad loans.

First-quarter net income declined 77 per cent to $1.21 billion from $5.26 billion a year earlier, the Charlotte, North Carolina-based bank said on Monday in a statement. Results included $1.31 billion in trading losses and $2.72 billion in costs for uncollectible loans.

The slide casts doubt on Chief Executive Officer Kenneth Lewis’s goal to increase profit by at least 20 per cent this year.

The bank’s consumer unit, which contributed more than 60 per cent of operating income in 2007, faces a nationwide jump in unpaid debt and the highest unemployment rate since 2005. Overdue US credit-card bills are the most in more than three years and foreclosures soared 57 per cent in March.

Slowing economy

Revenue fell 6 per cent to $17.3 billion. Profit decreased 59 per cent to $1.09 billion in the consumer and small business unit, and dropped 92 per cent to $115 million at the corporate and investment bank. It said home equity, homebuilder and small business loans were “particularly” affected by the slowing economy.

“These results clearly did not meet our expectations,” Mr Lewis said in the statement. “The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance.”