Bank of America Corp posted a quarterly profit that topped Wall Street forecasts, but the largest US bank warned of a fresh surge in troubled loans from credit card, mortgage and business customers due to the weak economy.

Chief Executive Kenneth Lewis said tough economic conditions will hurt results into 2010. The bank set aside $13.38 billion for bad loans for a second straight quarter, and said net charge-offs totaled $8.7 billion, up 25 percent from the prior three-month period.

Nonperforming assets surged 21 percent to $30.98 billion. The bank added $4.63 billion to reserves for bad loans, ending with $35.78 billion.

"Growth in charge-offs and non-performing assets still scares the daylights out of me," said Paul Miller, an analyst at FBR Capital Markets.

Charlotte, North Carolina-based Bank of America said on Friday second-quarter net income applicable to common shareholders fell 25 percent to $2.42 billion, or 33 cents per share, from $3.22 billion, or 72 cents, a year earlier.

Before preferred stock dividends in both periods, profit fell 5 percent to $3.22 billion.

Net revenue rose 61 percent to $32.77 billion, helped by the acquisition of Merrill Lynch & Co.

Analysts on average expected profit of 29 cents per share on revenue of $33.26 billion.

"Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010," Lewis said.