Bank of America: Strong Q4 Earnings, On Track To Benefit From 2022 Rate Hikes
(Preview) Company Update (BAC US) (Buy)
Summary
BAC reported strong Q4 results on Wednesday, showing the operational drivers that will make it a key winner from 2022 rate hikes.
Loan growth accelerated to 3.4%, with every category growing except Home Equity, and is expected to be high single digits in 2022.
Interest income will grow $6.5bn if rates rise 100 bps, while the impact from lower markets and corporate activity should be limited.
Expenses grew a modest 2.0% from Q3, and management expects to hold them flat in 2022, allowing strong operational leverage.
With shares at $46.44, we expect a total return of 41% (9.4% annualized) by the end of 2025. The Dividend Yield is 1.8%. Buy.
Introduction
We review our Bank of America Corporation investment case after Q4 2021 results on Wednesday (January 19). BAC stock closed up 0.4%.
BAC 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, shares have returned 73% (w…