2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders In Q2 2024: 92
Share Price Target Upside: 27%
Share Price Target: $49
Bank of America Corporation (NYSE:BAC) is one of the biggest banks in the world and in America courtesy of its user base of 6 million people. It is also one of the few Global Systematically Important Banks (GSIBs) designated by the US government, which means that Bank of America Corporation (NYSE:BAC) can seek government help in case of turmoil to ensure it does not cease functioning. However, the bank’s large consumer focus means that in times of high rates, the bank faces corresponding high costs. For instance, in H1 2023, Bank of America Corporation (NYSE:BAC)’s interest expense was $32.4 billion and marked a 734% annual jump. While H1 2024 saw this growth taper to 40%, the impact of high costs remained as the bank’s net interest dropped by $900 million and led to flat net income growth. Yet, since Bank of America Corporation (NYSE:BAC) is a diversified bank, it also has a sizeable presence in the investing banking, investment services, and card markets. These do well in a growing economy marked by low rates and could create tailwinds in the future.
Bank of America Corporation (NYSE:BAC) is already seeing growth in these areas. Here’s what management said during the Q2 2024 earnings call. Here is what they said:
“We grew investment banking fees 29% year-over-year and saw sales and trading revenue increase 7%. Global Markets had its 9th consecutive quarter of year-over-year growth in sales and trading revenue, a good job by Jimmy DeMare and his team. Card and service charge revenue also grew by 6% year-over-year in our Consumer business. Much of this fee growth is a result of our intensity around organic growth, and is a testament to the diversity of our operating model. Now on to slide three. Organic growth has been driven by several key factors. First, we focus on our customers. We continue to place them at the center of everything we do. Consumer led the way in delivering solid organic growth with high-quality accounts and engaged clients. For the 22nd consecutive quarter, we had significant net new consumer checking accounts.
We expanded our customer base and our market share. Specifically, we added 278,000 net new checking accounts this quarter, which brings our first six months of 2024 to more than 500,000. In wealth management, we added another 6,100 new relationships this quarter. In our commercial businesses, we added 1,000s of small businesses and 100s of commercial banking relationships. This has led to now managing $5.7 trillion in client balances, loans, deposits, and investments across the consumer and wealth management client segments. In those areas, we saw flows of $58 billion in the past four quarters. Our emphasis on personalized financial solutions and superior customer service has strengthened customer loyalty, attracted new clients across all our businesses.”
