NEW YORK (Bloomberg) — Bank of America Corp., the largest US consumer bank, lost money on credit cards for the first time since its January 2006 purchase of MBNA Corp. as more borrowers missed payments amid the slowing economy.

The card-services unit lost $373 million in the third quarter, compared with a profit of $1.04 billion in the same period last year. Defaults on cards and home mortgages contributed to a 47-percent decline in operating profit at the consumer and small-business division, the Charlotte, North Carolina-based company said yesterday in a regulatory filing.

Credit-card lenders are facing "an exceptionally challenging period" as the US unemployment rate climbs, limiting borrowers' ability to repay loans, Moody's Investors Service said in an October 16 report. "The uncertainty and tempo of the turmoil will test even the stalwarts' ability to adapt."

Bank of America provided more details on its third-quarter results yesterday, two weeks after reporting a 68-percent decline in profit. Those results, released ahead of schedule to coincide with the announcement that the bank was raising $10 billion by selling common shares, were worse than analysts expected.

The consumer division, which contributed 55 percent of the bank's profit in the first nine months of this year, earned $1.2 billion in the quarter ended September 30, compared with $2.3 billion a year earlier.

The $35 billion purchase of MBNA made Bank of America the largest US credit-card issuer at the time. For the first nine months of this year, Bank of America earned $720 million in card services, compared with profit of $3.7 billion for all of last year and $5.7 billion in 2006.

The credit-card industry's default rates are "all but certain" to surpass post-recession peaks reached in 2003, Moody's said in the report. Unemployment may rise until the fourth quarter of 2009, pushing the default rate to a peak of about 8.5 percent from 6.82 percent in August, Moody's said.

Late payments of more than 30 days increased to 5.89 percent at Bank of America, up from 5.53 percent in the quarter ended June 30 and 5.24 in the third quarter of 2007.

American Express Co., the biggest US credit-card company by purchases, said on Monday profit in the company's US card business dropped 59 percent to $244 million in the third quarter.

US employers cut staff by the most in five years last month, pushing the jobless rate to 6.1 percent, according to the Labour Department.