Boston, MA, 11/20/2013 (wallstreetpr) – Moynihan had promised investors that he would ensure that the stock levels in Bank of America (NYSE:BAC) would reach their earlier levels. This was in January, 2010 at the time of taking over the helms from Kenneth Lewis. Kenneth had gone on an acquisition binge, taking over Merrill Lynch & Co. and Countrywide Financial Corp and left the bank in a not-so-good position.
Moynihan promised to shrink and simplify the bank. He sold off more than $60 billion of assets, settled mortgage claims worth $50 billion and boosted capital. The recovery was delayed on account of costs incurred in settling Countrywide mortgages, but the CEO negotiated tough settlements with federal and state regulators, private investors, bond insurers as well as Freddie Mac and Fannie Mae. A settlement $8.5 billion is in the courts, awaiting approval. Finally, Bank of America may have been able to rid itself of its past sins. Stock of the bank was trading at $15.20 per share after reaching a new 52-week high of $15.30.
The Bank is focusing on business now. The low interest rates are turning into a blessing in disguise. These have lead to renewed interest in the housing sector; new purchases are increasing and are being financed through cheap mortgage. Low unemployment is also fueling the housing sector. The economy seems to have shrugged off the effects of the government lockdown.
Bank of America is also focusing on its wealth management unit. With more than 1 million out of its 8 million customers in the ‘affluent’ list, the bank has a ready market for this unit. This unit grew by 26% in the third quarter to give revenues of $718 million. The bank is also focusing on cost cutting measure which include cutting down on its branch strength from 6,100 to 5,000. The bank is relying on technological advances to ensure that customer service does not suffer as a result of cutting down on branches or staff.
The stock was trading at $15.22 in after hour trade on November 19, 2013.
