Bank of America Corp (BAC) Generates Substantial Profits

Consumer and commercial banks

JPMorgan Chase was able to offset concerns by generating revenue growth from underwriting and asset management activities. Over the short-term, it seems the universal bank will be able to sustain higher rates of revenue than both Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC).

This is because Bank of America and Wells Fargo are heavily dependent on commercial/consumer lending and financial services. Unfortunately, there’s not a whole lot of pent-up demand on the commercial side of the business. The consumer business may grow at greater rates, but that’s because of housing; while the housing market is likely to recover, it won’t have enough of an impact to offset a weakening in the commercial side of the banking businesses.

Wells Fargo reported flat revenue growth for the most recent quarter, whereas Bank of America reported a 3.7% year-over-year improvement. The two banking giants should be able to grow revenue at mid to upper single-digits for the foreseeable future.

Conclusion

Based on historical trends and future economic conditions, traditional savings and loan banks may be generating lower sales. Yet, Bank of America may be able to cut costs in order to generate more earnings. The same may not apply to Wells Fargo because it is currently operating near record profit margins. It simply doesn’t need too.

JPMorgan Chase could grow revenue the fastest based on how its business is currently structured. Rising stock values will result in larger asset management and underwriting fees. Longer-term, JPMorgan Chase should generate revenue growth by increasing its consumer and commercial lending activities. Perhaps it’s time you took a look at some of these big banks; you might be surprised with what you find.

The article Bank of America Generates Substantial Profits originally appeared on Fool.com.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase & Co (NYSE:JPM)., and Wells Fargo. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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