Bank of America: Interest Rates Could Drive Shares Even Higher


  • Supported by a favorable interest rate environment, BofA closed FY 2022 accumulating $30.7 billion of pre-tax earnings.
  • In 2022, BofA’s net interest yield jumped to 2.22%, an increase of 55 bps as compared to Q4 2021, adding $3.3 billion of incremental NII.
  • The full effects of the 2022 rate increases are likely to materialize only in late 2023/ early 2024, and as rates are likely to rise further in 2023.
  • Anchored on analyst EPS estimates through 2025, I value BAC stock with a residual earnings model and calculate a fair implied share price of approximately $47.

Bank of America in downtown Portland



Bank of America (NYSE:BAC) delivered a strong Q4 2022, beating analyst estimates with regards to both revenue and earnings. But although BAC continues to perform — and the macroeconomic backdrop remains favorable given a strong interest rate environment — the financial

BAC vas SP500 12 months performance

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BofA Q4 Results

BofA Q4 Results

BofA Q4 Results - Segments

BofA Q4 Results

BofA Q4 Results - NII Expansion

BofA Q4 Results

BofA Q4 Results - Loan Portfolio

BofA Q4 Results

BofA valuation

Analyst Consensus Estimates; Author’s Calculation

BofA valuation sensitivity table

Analyst Consensus Estimates; Author’s Calculation

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: this writing is not financial advise, but expresses the opinions of the author only.

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