Please ensure Javascript is enabled for purposes of website accessibility

Is Bank of America a Buy After Earnings?

By Matthew Frankel, CFP® – Nov 6, 2021 at 6:27AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After a strong quarter, is it a good time to add the megabank to your portfolio?

Bank of America (BAC 0.31%) stock is up by more than 100% over the past year, but could it still be worth a look? In this Fool Live video clip, recorded on Oct. 18, Fool.com contributor Matt Frankel and Industry Focus host Jason Moser take a look at the bank's latest results to see how things have been going for the massive financial institution

10 stocks we like better than Bank of America
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Bank of America wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of October 20, 2021

 

Jason Moser: Well, let's move on to Bank of America. Again, I know this is a bank that you follow closely, a bank you like, it seemed like it was a pretty good quarter.

Matt Frankel: Yeah. I'm going to sound like a broken record in some of these just because -- I aged myself with that phrase, broken record. Most people listening don't know what a record is.

Moser: Boy's making a comeback. Something that repeats.

Frankel: Broken record is something that repeats itself for young ones out there. Bank of America beat on both earnings and revenue. They beat expectations on both. Earnings were up 58% year over year, which is really nice because remember there weren't these big reserve releases last year, things like that. It was more going the other direction, banks were setting aside money in anticipation that things were going to get bad.

Bank of America released $1.1 billion in the quarter. Not quite as much of a reserve release as JPMorgan (JPM 0.24%), but still over $1 billion. A billion is a billion. Net interest income grew 10% year over year, which was nice to see, given that the interest rates, like I mentioned, are just starting to tick up, which was much better than expected. Annualized loan growth is up 9% quarter over quarter. I think that was the best out of the big banks. Their loan portfolio is growing nicely led by commercial lending, which was nice to see. Meaning companies are willing to borrow and spend money more than people thought.

Investment banking fee income is up 23% year over year. Advisory revenues, M&A, and equity underwriting, which is IPOs, were the strongest parts. That part was up 65% year over year and they beat their trading revenue which is, like I've said, notoriously tough to predict, beat on both the fixed income and the equity side, unlike JPMorgan Chase. Really solid quarter if I were to give JPMorgan a B for the quarter, I'd give Bank of America probably a B+ or A-.

Moser: One thing that stood out to me, they have 41 million customers now using their digital platform, which I'll just tell you from the perspective of one of those 41 million and we've been Bank of America customers for a long time, one of the reasons we are Bank of America customers, frankly is just a headache trying to switch banks. But, even if I wanted to, which we don't, I think that's the key there is that we really have no reason to. The service is good. We think the digital platform is good. It just feels like that's such a sticky form of engagement that will keep people in that universe. It really is very user-friendly digital platform, which to me it feels like they're only going to continue to make those investments and grow that capability up.

Frankel: Well, out of the five we're talking about, I feel like Bank of America took the lead on investing in technology.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Matthew Frankel, CFP® owns shares of Bank of America. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.