M*********r
发帖数: 50 | 1 From the recent 10Q, BAC's near future is rather grim. Two years after
purchasing Countrywide Financials and Merrill-Lynch and the global turmoil,
BAC's "home loan" portion shrank by 30% and its "Wealth Management" shrank
by 15%.
These assets are further reduced by the recent foreclosure class lawsuits, $
47 billion in alleged defectively underwritten mortgage bonds, etc. The
recent $10.6B write down as "Goodwill impairment" is only the tip of an
iceberg.
BAC's traditional banking profits are significantly reduced too. Its deposit
was slightly reduced by 1%, but the profitability was down by 20% from the
reduced business activities. Similarly, its credit card profit is halved.
Furthermore, due to the financial melt down in 2008, governments are pushing
for a tougher regulations on the banking industry. The so called "Basel III
regulation" requires the banks to hold 4.5% of the common equity by January
2015, to install a framework for counter-cyclical capital buffers to reduce
the liquidity ratio of the asset and a reduced leverage ratio, which
further reduces the profitability of the banks.
The fallout of 2008 financial melt down is far reaching to the banking
industry and it will be seen in the coming years. There will be a
fundamental structural change similar to the "Saving/loan crisis" around
1990 (shown in the figure), but much bigger in magnitude.
Holding BAC as an asset play in the near and short term (5 yrs) is not
recommended simply because the opportunity cost for holding it is just too
much. |
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