Bank of America Corp (NYSE:BAC)
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One of the country’s largest banks by assets and branches, Bank of America also provides credit cards, asset management, and other money-related services.
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One of the country’s largest banks by assets and branches, Bank of America also provides credit cards, asset management, and other money-related services.
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Bank of America is a leading banking organization providing a wide range of banking and financial services to 29 states in US and 49 countries. It has a vast network of 5,800 retail-banking centers and 16,700 ATMs across the world.
Over the years, the bank has been able to maintain a high quality of assets with non-performing loans being as low as 0.22%. Moreover, the bank is the most profitable bank in terms of margins at 43.1%. The maintenance of profitability is largely a result of the bank’s expertise in cross selling of products, and since the past few years, it has beefed up the brokerage and investment-banking unit.
During last year, Bank of America became a significant shareholder and long-term strategic partner of China Construction Bank. This move will add significant value to Bank of America, and will give it a head start in the booming Chinese economy with its huge middle class population. Moreover, benefits of the partnership would arise from a combination of China Construction Bank’s local knowledge and Bank of America’s product expertise, technology, and experience in managing growth and scale.
In addition, the bank’s recent acquisition of the U.S. Trust, which has a huge base of high net worth customers, would further boost the bank’s focus on the wealth management division. Profits from this acquisition are expected to arise from the strong earnings potential of U.S. Trust and improvement in margins, which is low at 19% as compared to Bank of America’s 42% for the same.
On the other hand, Bank of America’s 9% deposit base is about to reach the maximum legal share of 10% allowed by the Federal Reserve. Further, growth can take place only through additional fee-based services and foreign acquisitions. However, the most attractive feature of the stock is that it trades at the cheapest multiple among its peers with the highest dividend yield of 4.23%, thus making it a promising buy.
if my goal was to buy one stock i could not have to think about for the next 20 years, i'd be happy collecting BAC's nice dividend, knowing there's plenty of growth, too...
With deposit base accounting for 9.3% of the total national share and 10% being the cap the bank might resort to more international ventures for expansion. Endorsing the same it has set an ambitious goal of being in the top ten international investment banks and about 20% of the revenue to come from non-U.S. regions like Europe and Asia. Philosophically it believes in cross selling and looks well position generating around 50% of its revenues from fee-based sources. Financial position of the bank looks rock solid being well capitalized, adequate loss reserve and excellent profitability. It is already a market leader in card business and still remains very bullish on other payments processing business like merchant services. Despite unfavorable economic condition of flat to inverted yield curve, rising credit cost in 2006 the stock appreciated 16% owing its success to the expense control measures, geographical reach and franchisee. Management takes great care in acquisition, being sensible dealmakers going after those that have good quality assets and reputed franchise. Acquisition of U.S. Trust would help it beef up the wealth management business and comes a strong answer for those investors who had a doubt over the banks long-term future after attaining size and maturity. Moreover its past deals are paying of well and the MBNA deal of 2006 with result in expense efficiencies to the tune of around $900 million for 2007. Valuation in the form of high dividend and low price to earning ratio add more glamour to the stock and looks set to beat the market.
Would like to preface this by saying that I agree with your position. 15% of my personal portfolio is invested in the past I have resisted recommendations to sell and diversify. That being said the stock has underperformed the S&P 500 since October of last year even with the 4% dividend yield. Do you have any thoughts about when and how you see the stock beginning to move in a positive direction again? I understand that its recent runup has us all the shareholders spoiled.
Would like to preface this by saying that I agree with your position. 15% of my personal portfolio is invested in the past I have resisted recommendations to sell and diversify. That being said the stock has underperformed the S&P 500 since October of last year even with the 4% dividend yield. Do you have any thoughts about when and how you see the stock beginning to move in a positive direction again? I understand that its recent runup has us all the shareholders spoiled.
Would like to preface this by saying that I agree with your position. 15% of my personal portfolio is invested in the past I have resisted recommendations to sell and diversify. That being said the stock has underperformed the S&P 500 since October of last year even with the 4% dividend yield. Do you have any thoughts about when and how you see the stock beginning to move in a positive direction again? I understand that its recent runup has us all the shareholders spoiled.
Would like to preface this by saying that I agree with your position. 15% of my personal portfolio is invested in the past I have resisted recommendations to sell and diversify. That being said the stock has underperformed the S&P 500 since October of last year even with the 4% dividend yield. (Actually has lost 5%)Do you have any thoughts about when and how you see the stock beginning to move in a positive direction again? I understand that its recent runup has us all the shareholders spoiled.
Would like to preface this by saying that I agree with your position. 15% of my personal portfolio is invested in the past I have resisted recommendations to sell and diversify. That being said the stock has underperformed the S&P 500 since October of last year even with the 4% dividend yield. (Actually has lost 5%)Do you have any thoughts about when and how you see the stock beginning to move in a positive direction again? I understand that its recent runup has us all the shareholders spoiled.