Bank of America signalled that it is yet to put crisis-era mortgage woes behind it as a $ 5.3bn legal charge in the third quarter wiped out most of the bank's profit. 

Net income fell to $ 168m in the three months ending September after BofA took a legal charge - which investors were already aware of - relating to a $ 16.7bn settlement with the Department of Justice over the mis-selling of mortgage-backed securities. 

But, in the bank's earnings call on Wednesday, chief financial officer Bruce Thompson indicated that most of the remaining $ 500m in reserves were for legacy-related mortgage issues, suggesting that the bank's payouts over soured mortgages are not over yet. 

While JPMorgan Chase said this week it had ramped up legal reserves amid global foreign exchange probes, BofA's legal expense of $ 5.6bn was split into $ 4.9bn for the DoJ settlement, $ 200m within global markets for litigation with a Japanese company and $ 500m largely related to legacy-mortgage matters. The remaining $ 400m of the DoJ settlement, not included, formed part of the bank's mortgage relief deal. 

Including the deduction of dividends on preferred shares, the bank reported a loss of 1 cent per share, better than analyst estimates of a 9 cent loss. 

Shares in the bank fell 5 per cent to $ 15.69 in New York. 

The bank had already warned investors that the settlement would reduce third-quarter earnings by $ 5.3bn or 43 cents per share after tax. BofA earned $ 2.5bn in net income in the same quarter a year ago. 

Under chief executive and chairman Brian Moynihan, BofA has focused on cleaning up its financial crisis woes and investors are looking to see how the bank will increase revenues. 

"We saw solid customer and client activity and improved profitability in most of our businesses relative to the year-ago quarter," said Mr Moynihan. "We remain focused on streamlining and simplifying our company and connecting customers and clients with the real economy, an approach that is paying dividends for them and for our shareholders. "

Revenues at the bank, excluding changes in the value of the bank's own debt, fell 5 per cent to $ 21.2bn from $ 22.2bn a year ago. 

The underlying results at BofA showed four out of its five business lines reporting higher profits than a year ago. The bank reported an 11 per cent increase in fixed income, currencies and commodities trading revenue to $ 2.2bn, albeit from a low base a year ago . JPMorgan Chase reported a 2 per cent rise and Citigroup announced a 5 per cent increase on Tuesday. 

"We had very good core expense control this quarter," said Mr Thompson. 

Stripping out legal expenses and legacy asset servicing, the bank cut its core costs by $ 300m compared with the prior quarter and a year earlier. BofA cut has cut 18,405 jobs to 229,538 in the third quarter from 247,943 a year ago. The bank also met its target of $ 2bn in savings a quarter, ahead of schedule. 

The bank revealed its supplementary leverage ratios - a closely watched regulatory measure - for the first time, saying that it exceeded the new US rules with a bank holding ratio of 5.5 per cent and a ratio of 6.8 per cent for the primary banking subsidiary. 

Earlier this month BofA announced a board decision to reverse the 2009 move to divide the role of chairman and chief executive, giving Mr Moynihan more power at the bank. Citigroup is now the only large US bank to split the roles. 

The move showed a vote of confidence in Mr Moynihan's leadership after nearly five years of cleaning up the bank and working through the legal woes of the subprime mortgage crisis. It also may pave the way for a more orderly succession.