NEW YORK CITY: Bank of America posted a better-than-expected profit for the third quarter, citing better credit quality and lower provisions for soured loans.

The second-largest US bank by assets said it had net income of $2.5 billion in the July-September period, up from $340 million in the 2012 third quarter.

Net income attributable to shareholders was $2.2 billion, compared with a loss of $33 million in the year-ago quarter. Earnings of 20 cents per share beat the average analyst estimate of 18 cents.

Revenue rose 5.4 percent from the 2012 third quarter, to $21.5 billion, short of expectations.

"This quarter, we saw good loan growth, improved credit quality and record deposit balances. Our customers and clients continue to do more business with us," chief executive Brian Moynihan said in a statement.

"The economy and business climate will improve even more quickly as conditions normalize, and we are well positioned to benefit from that."

The Charlotte, North Carolina-based bank's provision for credit losses was $296 million in the third quarter, sharply below the $1.8 billion put aside a year ago.

A restructuring to streamline operations and cut costs significantly lowered expenses in the quarter ending September 30. The bank has cut 24,561 jobs from a year earlier, mostly in its mortgage and foreclosure activities, reducing its full-time workforce to 247,943 employees.

In its commercial banking segment, profit jumped 32 percent to $1.8 billion, helped by a 9 percent rise in average deposit balances to $522 billion.

But its home-mortgage division saw its loss widen to $1 billion from $857 million a year ago.

Last month Bank of America said it would cut 2,100 jobs from its home-mortgage segment, saying there had been a drop in refinancing amid a rise in mortgage interest rates.

The investment division also saw its loss increase in the third quarter, to $778 million from $276 million a year ago. Excluding a change in the cost of debt (DVA) and the impact of a British tax rate change, net income fell 39 percent to $531 million.

Shares in Bank of America were up 2.2 percent at $14.56 in midday trade on the New York Stock Exchange.