Bank of America (NYSE:BAC) on Friday announced a steeper-than-expected net loss of 1.0 billion dollars in the third quarter, linked to hefty writedowns of assets from Merrill Lynch and other charges.

The total loss for shareholders was even larger, at 2.24 billion dollars, or 26 cents per share, five cents worse than expected by most analysts.

The company paid special dividends of 1.2 billion dollars, including 893 million to the US government for its capital injections.

The largest US bank by assets said its results were "negatively impacted by continued weakness in the US and global economies and stress on the consumer, which continues to result in high credit costs."

The loss was the result of 2.6 billion dollars in writedowns on some assets, including from Merrill Lynch, the troubled brokerage giant acquired by Bank of America (NYSE:BAC) at the height of the financial crisis.

The group also took a 402 million dollar pretax charge to pay the US government to terminate its asset guarantee program.

Chief executive Kenneth Lewis, who is stepping down at the end of the year, said the bank performed well excluding these "non-core" costs.

"Excluding those items, our revenue continued to hold up well," Lewis said.

"Obviously, credit costs remain high, and that is our major financial challenge going forward. However, we are heartened by early positive signs, such as the levelling of delinquencies among our credit card customers."

Revenue net of interest expense rose 32 percent to 26.4 billion dollars in the quarter.