By Joe Rauch
CHARLOTTE, North Carolina (Reuters) - Bank of America Corp <BAC.N>, the largest U.S. bank by assets, reported higher-than-expected second-quarter profit as credit costs declined.
The Charlotte, N.C.-based bank posted net income of $3.1 billion, or 27 cents per share, down from $3.2 billion, or 33 cents per share, a year earlier. Analysts had expected 22 cents per share, according to Thomson Reuters I/B/E/S.
"Our quarterly results show that we are making progress on our strategy to align around our three core customer groups -- consumers, businesses and institutional investors," Chief Executive Brian Moynihan said in the company's earnings announcement.
Rival Citigroup Inc <C.N> is due to report quarterly earnings later Friday morning.
Bank of America's profit beat came despite an 11 percent drop in revenue. Revenue net of interest expenses decreased to $29.4 billion from $33.1 billion.
The bank's shares were down 4.4 percent to $14.71 in premarket trade.
Noninterest income fell 23 percent to $16.2 billion due to lower equity investment and mortgage banking income, and a decline in trading account profits.
But the bank's credit costs declined for the fourth straight quarter. Its provision for credit losses was $8.1 billion, down $1.7 billion from the first quarter and down $5.3 billion from a year earlier.
During the quarter, the bank recognized $1.1 billion in pretax gains from sales of noncore assets, including its main investment stakes in two Latin American banks -- Itau Unibanco and Santander Mexico.
The bank must raise $3 billion through asset sales by year's end as a condition of repayment of its government bailout.
The bank's shares fell 20 percent during the second quarter, outpacing a KBW Bank Index decline of 11 percent, amid an industry sell-off as the U.S. Congress debated financial reform.
(Reporting by Joe Rauch; editing by John Wallace)