NEW YORK — Bank of America Corp on Monday reported quarterly profit that fell less than expected, as improved investment banking and trading results offset a surge in bad loans, causing shares of the largest U.S. retail bank and mortgage lender to soar.

The 41 per cent drop in earnings was the bank's fourth straight quarterly decline, as the bank more than tripled the amount it set aside for bad loans, largely because of falling home prices and a slowing economy.

Bank of America nevertheless became the fourth of the nation's five largest banks to top quarterly earnings forecasts, joining Citigroup Inc, JPMorgan Chase & Co and Wells Fargo & Co.

The bank also said its July 1 purchase of Countrywide Financial Corp, once the nation's largest mortgage lender, will add to profit faster and result in deeper cost cuts than previously estimated.

Bank of America shares rose $2.75 (U.S.), or 10 per cent, to $30.24 in morning trading, helping to pull broader U.S. equity markets higher. The shares had bottomed at $18.44 on July 15.

::ReportonBusiness.com