Update shared on17 Nov 2024
Fair value Increased 21%BofA Ends 2024 with a Solid Performance Across all Segments.
Bank of America performed very well across the board in the Q4 2024 with solid improvements in net interest income and non-interest income.
On the interest side, interest income rose 1% year-on-year, while interest paid on deposits fell 0.3%. This was the first quarter in several years with interest income rising more than interest paid.
The 3% increase in NII was attributed to global market activity, fixed-rate asset repricing, and loan growth of 4%.
BofA expects to add $300 million to NII each quarter. If that trend is realistic and persists my 2029 projection will be too low. At this stage I’m not convinced, but I’ll see how the loan book and interest rates evolve over the next quarter or two.
Non-interest income was 37% higher over 12 months, but actually 15% higher when a $1.6 billion one off charge in Q4 2023 is excluded. This increase resulted from higher asset management (+23%) and investment banking(+44%) fees and an 18% increase in global market income. These gains are way ahead of my projection of 1 to 2%, but I’m expecting lower growth rates going forward.
Non-interest expenses rose 7.4% vs a 6.4% increase in total revenue. I do still expect expenses to fall (as a percent of revenue) in time, so the net income margin should improve to just above 30%.
Book value per share was 7.3% higher vs my projection of 6.5%. The share count is still falling faster than anticipated, so I may need to change that in the next quarter.
Apart from net interest income and share buybacks everything is tracking with my narrative so I’ll be maintaining my assumptions and $41 fair value estimate.
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