Bank of America is considered to be one of the best financial stocks to buy now. It is the second-largest banking institution in the US and has a vast reach through physical branches throughout the US. The bank also has an investment banking arm and is considered to be a Tier 1 investment bank. On October 14th, Bank of America reported its Q32020 earnings.
Revenue and net income down
Revenue for the quarter came in at $20.3 billion, down 2.5% on a year-on-year basis as compared to revenues of $22.8 billion in Q32019. Net income was also down 0.9% year-on-year, falling from $5.8 billion in Q32019 to $4.9 billion in Q32020. The average return on assets was 0.71%, down from 0.95% in Q32019. The efficiency ratio was up to 71 from 69 in Q32019. The CET1 or the common equity Tier 1 capital rose to $173 billion. The CET1 ratio was up to 11.9%, much above the minimum requirement of 9.5%. Bank of America also paid $1.6 billion in dividends to shareholders during Q32020. The total loans and leases number was up 1% year-on-year to $974 billion from $965 billion in the same quarter a year ago.
The Best Bank Stocks To Buy Now 2020 Have Investment Banking Performance
The top-performing banking stocks in the year 2020 have been the ones that have retail banking as well as investment banking operations. Because of the pandemic, the retail banking and commercial banking business has taken a hit. Borrowers have seen their loan repaying capacities go down and businesses are not expanding their operations either. In such a scenario, income from trading and deal-making has offset the downturn in the retail and commercial banking side of the business.
On that front, Bank of America CFO Paul Donofrio said, “While down linked quarter, fees from capital markets in both market-making and investment banking were solidly up year over year. At $1.8 billion, investment banking fees were the second-best quarter in the company’s history. Brian noted progress in activities levels across many of our businesses, and that showed up in increased levels of fees, which helped to mitigate the linked-quarter decline in capital markets revenue. Q3 saw card income and service charges move higher from the more heavily impacted Q2 levels.”