Strategic Analysis of Bank of America

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Guidance on Case Study Bank of America

It is important to analyze the company's present position for identifying the company's long term objectives and accordingly recommend a strategy.

Present Financial Position of Bank of America

The financial position of Bank of America has been stable in the last 5 years upto 2016 with a marginal increase of 0.2 billion in the net interest income as the bank reported a net interest income of $41.79 billion in 2012 which increased to $41.99 billion in 2016 (MarketWatch, 2016). The non-interest income of the bank has been also increased marginally from $39.77 billion in 2012 to $42.03 billion in 2016 (MarketWatch, 2016). Despite of the marginal increase in the net interest income of 0.48% and non-interest income of 5.68% from 2012 to 2016, the net income of the bank rose substantially by more than 327% during this period (MarketWatch, 2016). The analysis of these financials depict that the company has been able reduce its expenses including both interest and non-interest expenses due to which the company has been able to achieve increase in the net income. This is evident from the fact that the bank has reduced its total interest expenses from $15.61 billion in 2012 to $9.12 billion and the non-interest expense also declined substantially from $72.33 billion in 2012 to $54.18 billion (MarketWatch, 2016). These financials depict that there is a decline of 41.57% of interest expense and 25% of non-interest expense for Bank of America from 2012 to 2016.

Market Share and Competitive Scenario

Bank of America was the market leader in United States of America by total domestic deposits of $1204.9 billion in 2016 and a market share of 10.73% and was followed by JP Morgan Chase with deposits of $1155.19 billion and 10.29% market share, further followed by Wells Fargo Bank and Citibank with respective deposits of $1145.34 billion and $493.07 billion and respective market shares of 10.20% and 4.39% (Comoreanu, 2017: Feb. 9).

In terms of total assets, Bank of America is at the third position with $1,683 billion and 10.50% market share following Wells Fargo Bank with assets of $1,768 billion and 11.03% market share; the market leader being JP Morgan Chase with assets of $2,249 billion and 14.04% of the total banking assets (Comoreanu, 2017: Feb. 9).
But in housing loans market, the non-banking lenders such as Quicken Home Loans and Caliber Home loans have gained a stronger market share and are ahead of Bank of America which is at fourth position with grant of 11,111 loans as compared with 13,580 home loans by Caliber and 18,753 home loans by Quicken loans and the market leader Wells Fargo Bank with 26,262 loans in the third quarter of 2016 (Nuiry, 2016: Nov. 1). The market share of the banks have been shrinking due to emergence of non-bank mortgage lenders in the United States of America which is attributed to the new banking regulations with tight capital requirements, enhanced scrutiny of banks and heft penalties for the defaulters (Nuiry, 2016: Nov. 1).

In automobile loans market, Bank of America was at fifth position with 3.5% market share with Ally Financial and JP Morgan being the market leaders with 5.9% market share wherein Ally Financial leads marginally with $64.8 billion loans being provided in third quarter of 2016 (Trefis Team, 2016: Nov. 11).

The SWOT Analysis of Bank of America will help in identifying the internal strengths and weaknesses and matching them with the external opportunities and threats. This will help in identifying the ...