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Bank of America # BAC is an American financial conglomerate that provides a wide range of services for individuals and businesses, from opening deposits to investment banking.

Bank of America # BAC is an American financial conglomerate that provides a wide range of services for individuals and businesses, from opening deposits to investment banking.

6 October 2020

An American financial conglomerate, provides a wide range of services for the population and business, from opening deposits to investment banking. It is one of the largest US banks in terms of assets. The bank’s services are quite diversified. The company has four main divisions – Consumer Banking, Asset Management, Global Banking, Global Markets. The first division provides financial services to ordinary consumers – opening deposits, deposits, mortgage loans, etc. the consumer segment of the business brought in $ 21B of revenue in 2019. The second division specializes in asset management for high net worth clients, revenue from this activity is accounted for, this segment brought the bank just under $ 20B in revenue in 2019. The third division provides services for business – loans, capital raising (bond issue, IPO), in 2019 this segment of the company’s business brought it $ 21.5B in revenue. The fourth division provides services to institutional investors (clearing, trading on exchanges, consulting), the revenue for 2019 from this sector was $ 15B.

Despite good diversification in the company’s areas of activity, with low rates, the company’s interest income remains quite low for 2020.

However, the current crisis has forced companies to raise finance, which has increased the bank’s fees, mainly in the Global Banking segment.

The banking sector, unlike the technology sector, has not yet recovered from the March fall. At the same time, the potential of some banks remains quite high. Mainly due to a diversified business and high net assets.


Also, before the pandemic, banks were actively repurchasing their own shares, which allowed quotes to rise. Despite the Fed’s restriction on this procedure until the end of 2020, it can be argued that buybacks will resume from the beginning of 2021, which will push the share price up.

Warren Buffett also recognized the quite good potential of the banking sector in the summer and increased the share of Bank of America in his portfolio.

Despite the uncertainty in the stock market due to the pandemic and the upcoming US elections, banking sector stocks are still attractive for investment. A price below $ 28 per share for the current one is a good buy for a long-term investment.

Aravana Capital Management provides clients with profitability even during downturns in global equity and bond markets.


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6 October 2020
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