Bank of America: Fortunes Set To Shift As Rate Cuts Diminish Paper Losses (Rating Upgrade)

Summary:

  • Bank of America may face net interest income pressure due to variable deposit beta and low-yielding fixed rate securities.
  • The market narrative now predicts rate cuts by the Fed in 2024, which could alleviate deposit beta pressure and maintain net interest income.
  • I upgrade BAC stock to “Hold” and revise the base case target price to $37.57/share.
Bank of America To Buy MBNA For $35 Billion

Davis Turner

I have previously argued that Bank of America (NYSE:BAC) is likely to face net interest income pressure, as variable deposit beta cuts into low-yielding fixed rate securities that the bank acquired in the post-COVID aftermath. The thesis was supported by


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Not financial advice.

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