Bank of America 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."

Like some other major banks, Bank of America faced headwinds in mortgage and consumer segments, offset by stronger results from investment banking.

Credit card operations lost 1.0 billion dollars and home loans lost 1.6 billion. Its global markets trading operations however posted a profit of 2.1 billion dollars.

The overall results were hurt by 2.6 billion dollars in writedowns on some assets, including from Merrill Lynch, the troubled brokerage giant acquired by Bank of America at the height of the financial crisis. But the company said this was due to "the market's improved view of Bank of America's credit cost."

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.

The disappointing results from Bank of America came on the heels of stronger-than-expected profits from its key peers -- JPMorgan Chase, Goldman Sachs and Citigroup.

Bank of America has expanded during the global crisis, absorbing giant lender Countrywide Financial as well as Merrill Lynch.

Unlike some of its peers, it has not repaid the government for its capital. It received 25 billion dollars under a program to shore up capital in the banking system and another 20 billion to help it absorb Merrill Lynch.

Under an agreement announced Thursday, Lewis agreed to work without pay for 2009 on the recommendation of the government "pay czar" overseeing compensation to bailed-out firms.