Boston, MA 10/16/2014 (wallstreetpr) – The CEO of Bank of America (NYSE: BAC), Brian Moynihan discussed Bank’s third quarter results on Wednesday when the yield on 10-year Treasury’s crashed by 2%. The bank has reported a loss per share in this quarter, though not severe as expected. The various yields have dropped down which proves that the future of a bank is dependent on various external forces which cannot be controlled. On that basis, the investors can not push a bank’s shares or its valuation beyond a certain level. Currently, this level is 1.15 times the tangible book value.
Performance Matters
In fact, Bank of America has even defeated Analyst expectations for this quarter. The revenues have shrunk by 1.5% as compared to the previous year. It could be possible this time due to the tax benefit; the expense cuts were deeper than what it was forecasted and the quality of credit was better than expected which decreased the net charge-offs. Improving the credit facility and cost cutting can only boost one’s performance. The net charge-off ratio is lowest in this decade at 0.46%, which further brings down the expectations.
Four out of a five Bank of America (NYSE: BAC) business lines have reported good and high net income, as compared to the previous year. It seems very difficult for the bank to see any future growth as there is no rise in the rate of interest and no growth in loan rates too. The latest drop in yield values and other global growth concerns have brought the investors into a fix that whether the rate will be increased by the Federal Reserve at this time or not?
Clarity Missing
Bank of America (NYSE: BAC) has managed to do a good job by maintaining its financial position against all odds, but current valuations may increase bank’s legal woes. The absence of clarification about the future outlook of interest rate has kept the bank on its toes, and this will also impact company’s share prices till the situation improves.
