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BofA (BAC) to Double Domestic Consumer Banking Market Share

Zacks Equity Research

Bank of America’s BAC CEO, Brian Moynihan, recently in an interview with the Financial Times, stated that the bank aims to double the consumer market share in the United States. Nonetheless, he didn’t offer timeline for this.

He said, "Our market share in consumer is probably 12, 13, 14 percent, depending on who counts. ... The reality is, you could double that."

With deposits growing above the industry rate, a strong balance sheet with excess liquidity and a low risk loan portfolio, BofA remains well positioned to improve its market share. Notably, total net revenues for the Consumer Banking segment have been improving continuously, recording a three-year compound annual growth rate of 6.1% (2017-2019).

Moreover, BofA intends to grow the consumer business domestically. This is because Moynihan believes that it will take considerable time for the company to gain market share and boost its revenues or deposits, if the bank opts for overseas growth.

When asked whether the increased concentration in banking will be favorable for the customers, Moynihan stated, “If we do a good job for the customers and clients and we're fair in our pricing, I think that's good because ... the scale that we have enables us to do more for the customers."

BofA is already undertaking measures to improve its consumer banking business further. The company is on track to open 500 financial centers in new cities and redesign 2,500 centers with technology upgrades by 2021.

Also, it is opening fully automated branches that will feature ATMs and video conferencing facility, allowing customers to communicate with off-site bankers. Further, the company has plans to add 2,200 more ATMs to its network.

All these efforts, along with increased use of AI-powered chatbots Zelle and Erica, will enable BofA to improve digital offerings and cross sell several products, including mortgages, auto loans and credit cards.

Shares of this Zacks Rank #2 (Buy) company have gained 19.3% over the past year, outperforming the industry’s rise of 18.4%.

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