NEW YORK (Reuters) - Bank of America Corp BAC.N, the largest U.S. retail bank, may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios, according to a banking analyst.

A taxi speeds past a Bank of America branch in New York's Times Square January 11, 2008. REUTERS/Brendan McDermid

Richard Bove of Punk Ziegel & Co also slashed his earnings forecasts for the bank through 2010, though he still expects a first-quarter profit.

He said actual losses in the portfolios should be “somewhat less” than the amount he expects set aside, suggesting the bank would be conservative in its forecast of future credit trends.

“I do not foresee the economy plunging to a level that will substantiate this reserve build,” wrote Bove, who has a “buy” rating on the bank, in a report dated March 24. “It is my impression that the management has made a decision to try to take, upfront, the potential losses that it believes may be nascent.”

Bove cut his profit per share forecast to $2.98 from $3.81 for 2008, to $3.96 from $4.30 for 2009, and to $4.78 from $4.93 for 2010. He sees first-quarter profit of 37 cents per share.

Bank of America was not immediately available for comment.

In January, Chief Executive Kenneth Lewis said he expected full-year profit would top $4 per share. He predicted credit costs would rise by more than 20 percent, largely in consumer portfolios, but that such an increase would be manageable.

The Charlotte, North Carolina-based bank set aside $3.31 billion for credit losses in the fourth quarter, and $8.39 billion for all of 2007, up 67 percent from a year earlier.

Bank of America agreed in January to buy Countrywide Financial Corp CFC.N, the largest U.S. mortgage lender, in a transaction now valued at about $4.4 billion.

The all-stock transaction values Countrywide at $7.63 per share, which is 32 percent above Countrywide’s Thursday closing price of $5.78. The gap reflects some investors’ expectations that Bank of America might at least try to renegotiate the merger terms because the housing market has weakened.

Bank of America shares closed Thursday at $41.86 on the New York Stock Exchange. They rose 17 percent last week, a strong week for bank stocks, and are up a little more than 1 percent this year.