The financial and banking sector attracts investors with its high yield, however, how often it happens, a low estimate may be associated with increased risks. Indeed, if problems begin in the economy, the solvency of business and individuals falls, and consequently, bank loan portfolios can turn into a powder barrel. However, for those who are ready to accept this risk Consider the BANK OF AMERICA report for the first half of 2021.
Pure interest income decreased by 11% to 22.4 billion, the overall revenue decreased by 1.7% to 44.2 billion. Pressure on interest income continues to have low bonds and yields of bonds in the United States. The Fed rate at a level of 0-0.25% does not allow banks to significantly expand their percentage marginality, so banks are trying to emphasize the non-profit income that Bofa increased by 7.8% y / y to 23.8 billion.
Net profit of Bank of America has shown a solid increase by the past year + 142% to 16.5 billion. The cause of such explosion growth is the formation of large reserves in 2020 to cover problem loans due to coronaccrisis. So for 1 PG20, 9.8 billion were sent to reserves, now because not all credit risks have been realized, reserves are slowly disbanded. So for 1 PG21, the disbandment of reserves added 3.5 billion to profit.
According to the current estimate, and the forward bank is estimated now in 12 years of payback. Capital of the Bank, which has a profitability of 10.5% is estimated at 1.3x. For comparison, Sberbank is estimated at 1.1-1.3 capital with its profitability of 16-22%. But, here, of course, you need to take into account that Sberbank earns in rubles, and Bank of America in the currency, therefore the assessments are similar.
Despite the fact that the consensus forecast of analysts is currently located in the $ 32 area, from current levels, a small share of Bofa may well get into a well-diversified portfolio.
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