The 2008 financial crisis had a devastating effect on the Bank of America. The bank shares were trading for as low as $2.53 in 2009. Also, the net income dropped from $21 billion in 2006 to $4 billion in 2008.
Mike Mayo, a bank analyst of Wells Fargo, recalled that the Bank of America was the reason for much of the investing public and consumers and the government losing faith and trust in banking. He added that if the government had not intervened for the Bank of America and other banks, then the Bank of America would have failed.
Today, Bank of America is flourishing despite the concerns about inflation and threats of a possible recession. The bank disclosed a net income of $31.9 billion in 2021, compared with a net income of $4 billion in 2008.
Kenneth Leon, a research director at CFRA Research, said that as the rates have increased and if the recession is shallow, they’re going to observe widening spreads and the capability of Bank of America to have significant earnings from the net interest income. He also said that this is distinctive to the financing industry, and Bank of America, being one of the largest banks, stands to benefit the most.
The lessons from the financial crisis have also made the Bank of America to go through significant transformations, permitting it to earn its position as the bank with the second-largest total assets in the US. However, JPMorgan is still way ahead as the largest bank in the USA, depending on its total assets.
Mayo said that the significant transformation at the Bank of America is that they had gone from irresponsible growth to responsible growth. A more conventional lending standard is just one example of the bank’s objective for sustainable development.
Mayo even added that one main aspect of the Bank of America’s responsible growth is to say no more often so that when they say yes, it results in more sustainable and responsible development, which is better for reputation.
- Published By Team Nation Press News