Bank of America: Stability Shown in Q2, P/E Still Less Than 10x
Company Update (BAC US) (Buy)
Highlights
ROTCE was 15.5% in Q2, above our assumption but down q/q
NII fell 2% sequentially but is guided to be more stable in H2
Expenses will continue falling in H2, credit costs are still modest
At $30.70, P/TBV is 1.32x, P/E is <10x and Dividend Yield is 3.1%
We expect a total return of 71% (25% p.a.) by end of 2025. Buy
Introduction
Bank of America (“BAC”) released Q2 2023 results on Tuesday (July 18). Shares finished the day up 4.4%, taking them back to their level before the U.S. regional banking crisis began in March, though still down 8.0% in the past year:
BAC Share Price (Last 1 Year)
Source: Google Finance (18-Jul-23).
We have followed BAC and other U.S. banks for more than a decade, and first published our research on BAC online with a Buy rating in October 2019. At present, BAC shares have gained just 21.0% in roughly 4 years since our initiation, largely due to a reversal since the start of 2022 during which the share price has fallen 31.0%.
We believe BAC shares continue to be…