What's Going On With Bank Of America (BAC) Shares

Benzinga · 10/18 15:12

Bank of America Corp (NYSE:BAC) shares are trading flat this week, though near 52-week highs, after the company announced a robust third-quarter fiscal 2024 net income of $6.9 billion, translating to EPS of 81 cents, surpassing analyst expectations of 77 cents.

However, the bank experienced a 12% decline in net income year-on-year, primarily attributed to higher provisions for loan losses and increasing operational expenses.

Despite this, the bank reported a modest revenue growth, with net revenue rising 1% to $25.49 billion, exceeding the consensus estimate of $25.29 billion.

What To Know: The results were buoyed by gains in trading revenue, asset management and investment banking fees, which collectively helped offset a decrease in net interest income. This positive momentum resulted in a stock price increase following the earnings announcement.

In terms of segment performance, Consumer Banking reported net income of $2.69 billion, down from $2.86 billion year-on-year. Global Wealth and Investment Management saw a slight increase in net income to $1.06 billion from $1.03 billion, while Global Banking experienced a significant drop to $1.9 billion from $2.6 billion.

Conversely, Global Markets reported a net income rise to $1.55 billion, up from $1.26 billion the previous year. Notably, investment banking fees surged 18% to $1.40 billion, underscoring the bank’s solid position in this competitive sector.

What Else: Despite a decrease in net interest income to $14.1 billion—down 3% year-on-year due to elevated deposit costs—Bank of America’s noninterest income rose by 5.5% to $11.4 billion. The provision for credit losses remained stable at $1.5 billion year-on-year, reflecting a cautious approach amidst changing economic conditions.

Looking ahead, Bank of America anticipates net interest income of approximately $14.50 billion in the fourth quarter, assuming a 25 basis points interest rate cut.

This outlook comes after the Federal Reserve’s recent decision to lower the lending rate by 50 basis points, reducing the benchmark rate to 4.75%-5%. This rate cut could serve as a tailwind for banks by facilitating cheaper borrowing and encouraging lending activities.

How To Buy BAC Stock

By now you're likely curious about how to participate in the market for Bank of America – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy ‘fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to ‘go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

According to data from Benzinga Pro, BAC has a 52-week high of $44.44 and a 52-week low of $24.96.