Bank of America: Profits Continued Upwards Trend in Q1 2022

(Preview) Company Update (BAC US) (Buy)

Summary

• BAC stock has risen 5.3% in the two days after good Q1 results, though still down 11% year-to-date; we believe this represents a bargain.

• Excluding one-off reserve releases, profits have been on an upward trend, as BAC is benefiting from both higher rates and economic recovery.

• Net Interest Income grew 13% year-on-year, thanks to both loan growth and higher net yields; sequential growth is expected to accelerate.

• Non-Interest Revenues have only fallen modestly from their COVID-boosted levels, and operational leverage is adding to profit growth.

• With shares at $39.57, we expect a total return of 66% (15.3% annualized) by the end of 2025. The Dividend Yield is 2.1%. Buy.

Introduction

Bank of America released Q1 2022 results on Monday (April 18). BAC stock has risen 5.3% in the following two days.

Bank of America has been a core holding in our portfolio for more than a decade, and we initiated our coverage of BAC on Seeking Alpha with a Buy rating in October 2019. Since our initiation, s…