TFC - Bank of America Should Outperform On Core Growth In '25-'26 But Is That Priced In?
2024-07-08 15:20:02 ET
Summary
- Bank of America has continued to outperform smaller, more spread-dependent banks, and Q2'24 should be the low point for NIM and net interest income.
- Leveraging past investments into technology, Bank of America should be able to pair slightly above-average revenue growth with above-average operating leverage, driving high single-digit pre-provision growth in '25-'26.
- Bank of America has opportunities to leverage growth in trading and investment banking that may not be fully appreciated, as well as core consumer growth opportunities in wealth and cards.
- Core earnings growth of around 4% and mid-teens ROTCE can support a fair value in the low-to-mid-$40's, suggesting that Bank of America shares are priced about where they should be.
The last 18 months have seen large “money center” banks continue to outperform smaller regional banks, as these larger banks can generally rely on more stable, lower cost funding, large sources of non-interest income, and flights to quality among more nervous customers. To that end, Bank of America ( BAC ) has continued to perform since my last update , with an 18% move outdoing not only smaller regional banks but also large banks as well (though not quite as good as others like JPMorgan (JPM))....
Bank of America Should Outperform On Core Growth In '25-'26, But Is That Priced In?