Summary
- Bank of America has seen significant moderation in net interest income growth.
- Moreover, the bank holds a higher proportion of interest-bearing deposits than last year, leaving the bank vulnerable to rate decreases.
- I do not see too much downside risk for the bank.
- However, I anticipate that growth will continue in a largely stationary manner for the rest of 2019.
Back in December, I made the argument that the price drop seen in Bank of America (BAC) was a significant overreaction, and that the stock would eventually rebound.
My reason for arguing this was that loan growth and equity performance remained strong for the bank, and that price would eventually recover as a result.
The stock has since rebounded to a level of $29 at the time of writing, and the stock has returned 23% since the start of this year, in comparison to the 16% return for the S&P 500:
Source: investing.com
