Bank of America vs. JPMorgan Chase: Who Has the Better Deposit Base?
With the Federal Reserve aggressively raising the federal funds rate, or the interest rate at which banks borrow from one another, banks will soon likely need to pay more interest on customer deposits.
A bank's deposit base is one of the most important characteristics that investors use. If a bank has a sticky deposit base that can maintain a cheaper overall funding cost than the average bank, investors will likely reward that bank with a higher valuation. That's because if deposit costs rise too quickly, it will cut into a bank's margins and reduce overall profitability.
So, with the Fed having already raised the federal funds rate to a range of 0.75% and 1% and rate hikes expected at all of the Fed's remaining meetings in 2022, let's take a look at which of the two largest deposit gatherers in the U.S., Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM), has the superior deposit base. This is something very important to look at when choosing which of these stocks to invest in.
Source Fool.com
