Press Release
DBRS Confirms Bank of America Corporation at AA (low), Keeps Positive Trend
Banking OrganizationsDBRS has today confirmed all ratings for Bank of America Corporation (Bank of America or the Company) and related entities and maintained the Company’s Positive trend. This rating action follows a review of the Company’s operating performance and credit fundamentals. The confirmation includes the Company’s AA (low) Issuer & Senior Debt rating and the AA Debt & Senior Deposits for Bank of America, N.A., the Company’s main bank subsidiary.
In DBRS’s view, the key factor underpinning Bank of America’s ratings and the Positive trend continues to be its leading U.S. super-regional banking franchise. The Company has the largest U.S.-domestic deposit base among all banks, as well as leading positions in U.S. credit cards, small business lending and middle-market banking. Moreover, Bank of America has a broadly diversified revenue mix with its strong corporate banking franchise with global treasury services and significant capital markets and investment banking operations, as well as substantial wealth management and asset management businesses. The Company generates strong, resilient earnings, supported by disciplined expense management.
In recent months, Bank of America has faced increasing headwinds in its capital markets and investment banking businesses that form part of its Global Corporate and Investment Bank (GCIB) business segment. The GCIB segment has announced substantial write-down losses due to market turmoil. New GCIB management is currently conducting a strategic review of this segment which faces formidable, better-entrenched competitors.
Moreover, as a leader in U.S. consumer lending, Bank of America’s is exposed to weak U.S. housing markets and a deteriorating economy. DBRS sees a risk of continued deterioration in credit quality, particularly in riskier portions of the Company’s home equity, credit cards and first mortgages portfolios. However, given Bank of America’s strong recurring earnings power, DBRS expects the Company to absorb a potential increase in loan loss provisions due to credit quality deterioration.
DBRS will assess the progress Bank of America makes in addressing the challenges it faces in its GCIB segment. DBRS will also assess how Bank of America copes with the credit quality challenge posed by declining house prices and a weaker U.S. economy.
DBRS expects the resolution of the Positive ratings trend will likely take place during Q2 2008. Ratings could be upgraded, if Bank of America continues to generate strong earnings, copes with credit quality challenges and resolves the uncertainty surrounding its GCIB segment. Conversely, if Bank of America’s earnings power weakened, its asset quality deteriorated significantly or if the GCIB segment faced continued write-down losses, this would be viewed negatively from a ratings perspective.
Note:
All figures are in U.S. dollars unless otherwise noted.
Ratings
BAC Capital Trust I
BAC Capital Trust II
BAC Capital Trust III
BAC Capital Trust IV
BAC Capital Trust V
BAC Capital Trust VI
BAC Capital Trust VII
BAC Capital Trust VIII
BAC Capital Trust X
BAC Capital Trust XI
BAC Capital Trust XII
Bank of America Corporation
Bank of America, N.A.
BankAmerica Capital II
BankAmerica Capital III
BankAmerica Institutional Capital A
BankAmerica Institutional Capital B
BankBoston Capital Trust I
BankBoston Capital Trust II
BankBoston Capital Trust III
ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.
Download This Press Release
Related Documents
Press Release:
Contacts
Roger Lister
Managing Director, Chief Credit Officer - Global FIG and Sovereign Ratings
+1 212 806 3231
roger.lister@morningstar.com- Alan G. Reid
Group Managing Director, Global Head of Fundamental Ratings - Credit Ratings Leadership
+(1) 212 806 3232
alan.reid@morningstar.com - William Schwartz
Associate Credit Rating Officer - Global Fundamental Ratings, Rating Practices
+(1) 212 806 3233
william.schwartz@morningstar.com