Will Bank of America continue to fall?
Bank of America $Bank of America (BAC.US)$ dropped over 3% in one day. Will it fall from from the cliff? 🧐🧐 Before we jump in to sell, let’s take a look if it’s safe to invest in it in the first place! 😃😃
One of the key metrics in analyzing banks will be looking at Net Charge-Off, which refers to the amount of loans or other debts that a bank has determined it is unable to collect and has written off as a loss. When a bank lends money, it expects to receive repayments from the borrower, which includes the principal amount plus interest. However, sometimes borrowers are unable to make their loan payments.
When a bank determines that it is unlikely to recover the full amount of the loan, it will "charge off" the loan by removing it from its books as an asset and recording the amount as a loss on its income statement.
By looking at the charts, you can see that BAC has maintained a very low net charge-off since 2008, be it in the commercial, consumer, or even credit card segment. 😊💯
Plus, it has a diversified deposit stream, thus making it a much safer bank to invest in.
Give me a ❤️ if you find it helpful! #bankofamerica #investing #arigatoinvestor #stockstobuy
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