Bank of America suffered a setback on its road to recovery as revenue in key divisions declined and earnings missed expectations, sparking a sell-off in its stock.

The second-biggest US bank by assets, which is trying to escape a toxic legacy from the financial crisis of bad loans and lawsuits, reported increased net income of $2.6 billion.

But BofA reported a decline in revenue at its consumer, mortgage and investment banking divisions and also disappointed on expenses. Shares in the bank fell more than 6 per cent yesterday, their biggest fall in five months.

Overall revenue rose 5 per cent to $23.7 billion, helped by an improved trading performance. Net income jumped from $653 million to $2.6 billion and earnings per share from 3 cents to 20 cents, below analysts’ estimates of about 22 cents.

Brian Moynihan, chief executive, celebrated "solid increases in loan growth to small businesses and middle-market companies, four straight quarters of steady growth in mortgage originations, record earnings in wealth management, and another quarter near the top in investment banking fees".

His comments were among the most positive from any big bank chief executive during the current earnings season. But BofA was the first of the big institutions to miss analysts’ forecasts and investors focused on the negative.

Net interest income, the amount of money earned from lending and investing deposits, fell from $11.1 billion to $10.9 billion year on year. BofA blamed the low interest-rate environment and lower consumer loan balances.

The mortgage business saw revenue fall from $2.7 billion to $2.3 billion and an increased net loss of $1.3 billion compared with $1.1 billion a year earlier. (Copyright The Financial Times Limited 1213)