Bank of America Is Struggling to Shake High Expenses. What Gives?
In the second quarter, Bank of America (NYSE: BAC), the country's second-largest bank by assets, once again reported higher expenses than investors and analysts were hoping for, especially for a bank of such high caliber. While some of that can be attributed to one-time items and COVID-related expenses, this is now the fourth quarter in a row that expenses have been uncharacteristically high.
Let's take a look at the high expense levels and see if this is part of a growing problem, or if it will pass in the coming quarters.
Bank of America's high expenses have led to a subpar efficiency ratio. The efficiency ratio is a popular metric that investors use to see how well a bank is managing expenses -- you get it by dividing a bank's total expenses by its total revenue (for example, if you had $50 billion of expenses and $100 billion of revenue, the efficiency ratio would be 50%). Naturally, the lower the efficiency ratio, the better.
Source Fool.com
