August 19, 2020 edition
THE BULL AGAINST THE BEAR. Whether you are optimistic or pessimistic, find the analysis of a two-part title. In this issue, Bank of America. Choose your side!
> Warren Buffett has just bought US $ 2.1 billion of additional shares of the bank and increased its interest to almost 12%.
> CEO Brian Moynihan’s management focuses on the essentials: organic growth, customers and costs.
> Its strong equity ratio (11.6%) and balance sheet deposits allow the bank to weather the pandemic without reducing its dividend and increasing it afterwards.
> 88% of loans granted by Bank of America are high quality or guaranteed.
> Its title is a triple bet on the American economic recovery, on market share gains and on a consequent revaluation of its title.
> Its security trades at reasonable multiples of 1.2 times the tangible book value and 0.9 times the book value.
> The persistence of anemic rates is particularly weakening the margins of this bank because it derives a greater share of its income from traditional banking activities.
> Provisions for loan losses will increase further for at least two quarters.
> Income growth promises to be more moderate than that of other banks and depends more on the recovery and the rise in rates.
> Non-banking activities, such as brokerage, securities trading and asset management perform less well than those of its rivals.
> His title is not that cheap compared to his financial performance, which is in the middle of the pack.