On Wednesday, Bank of America (NYSE:BAC) maintained its Overweight rating by a JPMorgan analyst, with a steady price target of $47.00. The analyst noted that Bank of America delivered mixed core third-quarter earnings per share (EPS) of $0.83, with reported EPS slightly lower at $0.81. The results for the third quarter of 2024 were driven by strong performance across all markets-related revenues, including trading, investment banking, and investment and brokerage services.
The bank's net interest income (NII) saw an increase from the second quarter of 2024, although the growth was modest, with half of the quarter-over-quarter increase attributed to trading NII. Bank of America has projected further quarter-over-quarter growth in NII for the fourth quarter of 2024, but excluding trading, the growth is expected to be modest and less than what was previously indicated during the second quarter earnings report.
The anticipated reported NII for the fourth quarter stands at $14.3 billion on a fully taxable equivalent (FTE) basis. This figure includes an increased benefit from trading NII, which is expected to counterbalance the impact of an additional rate cut. The analyst pointed out that the rise in trading NII effectively neutralizes the effects of further rate reductions, suggesting a slightly lower exit rate for NII excluding trading in the fourth quarter than what was guided in July 2024.
In other recent news, Bank of America's financial performance has shown promising signs, according to recent reports. The bank's third-quarter results revealed a revenue of $25.5 billion and an after-tax net income of $6.9 billion. The earnings per share reached $0.81, and net interest income (NII) saw a growth of 2%. These results came alongside the addition of 360,000 new consumer checking accounts during the quarter.
Evercore ISI, in its analysis, raised its price target for Bank of America to $45, maintaining an Outperform rating. The firm highlighted the bank's potential for NII growth, driven by stabilization in deposits expected in the second quarter of 2024. The growth in loans and deposits, rather than merely interest rate changes, was seen as providing a stable path for NII.
In addition to the NII, Evercore ISI pointed out the strength of Bank of America's Markets business, which demonstrated its capacity to significantly contribute to the bank's returns, with a 13.5% return on equity (ROE) and a 39% pre-tax margin. The bank's total assets reached $3.3 trillion, with deposits increasing by $20 billion.
Looking ahead, Bank of America anticipates its fourth-quarter NII to exceed $14.3 billion and foresees improved operating leverage moving into 2025.
InvestingPro Insights
Bank of America's financial performance and market position are further illuminated by recent data from InvestingPro. The bank's market capitalization stands at an impressive $324.0 billion, underscoring its status as a major player in the financial sector. This aligns with the InvestingPro Tip highlighting BAC as a "prominent player in the Banks industry."
The company's P/E ratio of 15.24 suggests a reasonable valuation relative to earnings, which is particularly noteworthy given the bank's strong performance across markets-related revenues mentioned in the article. Additionally, BAC's dividend yield of 2.47% and the InvestingPro Tip revealing that the bank "has raised its dividend for 10 consecutive years" demonstrate a commitment to shareholder returns, which may be attractive to income-focused investors.
In line with the article's discussion on Bank of America's earnings, the InvestingPro data shows a Basic EPS (Continuing Operations) of $2.77 for the last twelve months as of Q3 2024. This figure provides context for the quarterly EPS of $0.83 mentioned in the analyst report.
For readers interested in a more comprehensive analysis, InvestingPro offers 7 additional tips for Bank of America, providing deeper insights into the company's financial health and market position.
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