Bank of America's Diversified Business Model Continues to Grow With US Economy, RBC Says

MT Newswires Live10-16

Bank of America's (BAC) diversified business model continues to grow with the US economy, with its core business of gathering deposits and levering growth with loans poised to lead to strong long-term earnings growth, RBC Capital Markets said in a note.

The bank's Q3 earnings saw contribution from all major business lines, with Consumer Banking revenue rising 4% and adding over 200K net new checking accounts. Global Wealth & Investment Management rose 13%, while Global Banking grew average deposits 6.0% and average loans 8.0%, RBC said Wednesday.

Q3 profit was weighed down, however, by a $1.2 billion non-tax-deductible settlement charge related to deficiencies in the firm's Bank Secrecy Act and Anti-Money Laundering compliance programs, according to the note.

"Given the de-risking of its balance sheet over the last 15 years, we expect BAC to deliver resilient credit quality results over the next 12 months," RBC analysts said.

RBC lowered its price target to $60 from $65 and maintained its outperform rating.

Price: 51.35, Change: -0.04, Percent Change: -0.08

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