The analyst expects Bank of America's net interest margin to expand by 3 basis points during the fourth quarter, to 2.36%, which is, by far, his lowest estimated NIM among the nine large-cap banks. For 2013, Juneja expects Bank of America's margin to increase by one basis point, which may not seem like much, however, he expects a significant margin squeeze for most of the other large-cap banks, including a 23% decline for Wells Fargo, a 21% decline for PNC and a 20% decline for BB&T.
Most analysts expect the margin decline to be offset during 2013 by continued strong fee income from the mortgage refinancing wave, and a continued decline in credit costs as the economy continues to recover.
More Dividends Coming
Following the next round of Federal Reserve stress tests, Juneja expects all nine of the large-cap banks covered in the report to be approved to raise their dividends on common shares, with Bank of America going from the current nominal quarterly dividend of a penny a share to five cents a share in the second quarter of 2013, with the dividend increasing to even cents a share in the second quarter 2014.
Two other large-caps covered in the JPMorgan Report are currently paying quarterly dividends of just a penny a share. Juneja expects Citigroup to raise its quarterly payout to 25 cents a share in the second quarter of 2013, with the dividend increasing to 43 cents a share in 2013; and for Regions Financial (RF) to increase its dividend to a nickel in the second quarter of 2013, going to six cents in 2013.
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