Profits excluding one-off gains at Bank of America's corporate and investment banking division slid 4% in the third quarter, as it blamed the costs of "increased" recruitment to its business for a 23% fall in capital markets and advisory profits.
Net profits in the investment bank unit climbed 24% to $1.92bn in the three months to the end of September, on the back of a 14% increase in revenues.
However, most of the revenue increase came from the one-off sale of the bank's Brazilian unit for $720m (€573m).
Excluding the sale, net revenues climbed just 1% compared to the same period a year ago, while net profits fell by $67m, or 4%.
Bank of America said: "Net income was lower due to increased personnel costs."
The bank said its capital markets and advisory business benefited from stronger credit and structured product sales and trading revenues but suffered from falling gains in liquid products.
While debt underwriting revenues rose 20% to $417m in the third quarter, equity underwriting fees fell 45% to $52m and advisory revenues were down 4% at $85m.
In the sales and trading business, fixed income revenues rose 6% to $1.01bn but equity revenues fell 14% to $310m. Total sales and trading revenues were flat at $1.32bn.
Capital markets and advisory costs rose 14% to $1.37bn as Bank of America's costbase continued to suffer from the aggressive expansion of its investment banking business. Higher provisions and compensation costs also flattened profits in the first and second quarters this year.
Bank of America chairman Kenneth Lewis pledged in 2004 to spend an extra $600m developing the investment banking business. About $100m of that was spent in Europe last year, the bank said in April.