Should You Buy Bank of America Stock After a $1.2 Billion Regulatory Fine?
Regulators fined the bank after anti-money-laundering violations.
On October 14, Bank of America (BAC) reported weaker-than-expected third-quarter earnings and disclosed a $1.2 billion regulatory fine for money laundering violations. The bank's stock fell by 4.7% in its worst performance in 18 months, with a 9% drop at one point. Despite the setbacks, Bank of America's net interest income (NII) increased by $1.2 billion year-over-year to $16.6 billion, indicating strong revenue from interest-earning assets.
CFO Alastair Borthwick assured analysts that NII should continue to grow at least 8% year-over-year in 2026 and 2027, assuming three interest rate hikes. The bank has already set aside funds for the remediation of the regulatory fine, which includes over $5 billion in suspicious transactions. While anti-money-laundering violations are common in large money-center banks, Bank of America's low-cost deposit base and strong commercial lending franchise make it well-positioned for rising interest rates.
The stock is slightly above its five-year average valuation, presenting a reasonable entry point for long-term investors seeking diversification in certain market conditions.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
