Bank of America Outlook

Why do i have a positive outlook on Bank of America ?

Recently i finished an analysis on financial sector to better understand mortgages and loans lender so here is some data:

-Return on invested Capital ratio of 0,79% in 2020 3Q 0,94% 2020 4Q and 1,51% 2021 1Q

- Loans to Assets ratio of 37,65% in 2020 3Q 36,02% 2020 4Q 31,53% 2021 1Q, which is pretty explainable with the decline of loans and leases and the rise of Total assets.

- Coverage ratio 23,0 2020 3Q 27,3 2020 4Q 31,6 2021 1Q

(Last 5 years)

- Relative DD (Alpha related)-37,30%

- Max time under water 418 d

- Max drawdown -49,27%

- Average drawdown -10,62%

Compared to the industry so BAC data - ETF financials tracker data =

- Relative DD (Alpha related) N/D

- Max time under water -44

- Max drawdown -5,93%

- Average drawdown -1,46%

Stock performance (closing price based)

1Y Return : GS 87.34% - JPM 67.85% - BAC 72.79%

5Y Return: GS 139.73% - JPM 152.58% - BAC 188.34%

Economy Reopen will eventually take, even if gradually a strong rise of rates. First, we don't know how much the rise will be. Second, nobody knows the effect on real economy, with 100% accurateness and a FED Tapering is not anymore a question of if?, but , when?.

The focus for the analysis is on mortgages and loans, so let's show some data:

- Refinanced mortgages of one-to-four family properties in the United States, as registered a 178% growth, comparing Q4 2020 and Q1 2020.

- Delinquency rate in Q1 2020 was 2.70, in Q4 was 2.12 and in Q1 2021 was 1.89

- Consumer Loans: Credit Cards and Other Revolving Plans registered a fall of 12% from march 2020 to september 2020, and a fall of 0.9% from september 2020 to may 2021.

- Commercial and Industrial Loans rose by 78.5% from 2004 to 2008, and 48% from may 2016 and may 2020. To notice that feb 2020 and march 2020 has registered the fastest growth ever, with a 28.8% growth from feb 2020 to may 2020, which is 25.9 basis points major then 2008 same monthly period.

Taking into account all the data in this analysis dashboard, the final review is that Bank of Ameria is a buy, because:

- Rise in rates in next years will advantage mortgages and loans lender, so Bank of America.

- Commercial loans and mortgages loans will face a fall in refinance debt and an inevitable rise in purchase loans trend, caused by the optimism of the reopen, similarly to roaring twenties.

- The Bank has strong liquidty measures and limited volatility measures, even considering that the dividends paid these years, so also a strong shareholders caring.

- The share price has outperformed the benchmark, the major etf tracker and also his major competitors.

- The fundamentals are strong and the structure of the holding is solid.

- (for bonds holders) Long term bonds Credit ratings are, A2, A- , A+, respectively from Moody's, Standard & Poor's, Fitch, with positive and stable outlooks While his segments have received by Fitch, an AA- and F1+ rating, respectively on Long term and short term bonds.

June-2021