Bank of America Corporation (NYSE:BAC - News) is targeting more cost cuts as part of its plan to boost efficiency, according to a Bloomberg report. The company already aimed at $5 billion in cost saves in the first phase of its ongoing initiative Project New BAC. Further, it expects to save additional costs of up to $3 billion in the second phase, as per the report, which cited the company's CEO's message during the January 19 employee meeting.
BofA launched a company-wide efficiency initiative with a goal to improve earnings by lowering expenses, increasing revenue, strengthening risk control and making changes to allow better execution and customer service, while returning more value to shareholders.
Last September, the company announced that it will retrench about 30,000 workers under the first phase of its ongoing cost-cutting initiative - Project New BAC. The first phase comprised BofA's consumer-facing businesses and support operations. The second phase involves investment and commercial banking, trading, and wealth-management business lines. The second phase is expected to be accomplished in April this year.
Notably, BofA is not the only institution, who is leaving so many jobless. Some of the U.S. banks, such as Citigroup Inc. (NYSE:C - News), Morgan Stanley (NYSE:MS - News) and PNC Financial Services Group Inc. (NYSE:PNC - News) also revealed their plans to reduce hundreds of jobs earlier.
Last week, BofA reported its fourth quarter earnings of 15 cents per share, substantially lower than the Zacks Consensus Estimate of 23 cents. However, this compares favorably with the loss of 16 cents in the prior-year quarter. The sale of non-core assets and accounting gains made it possible for the company to remain profitable.
BofA is making every effort to keep itself afloat. Initiatives such as realigning the balance sheet in accordance with regulatory changes and shedding non-core assets to strengthen its capital position vouch for its good business intention. It is poised to benefit from its large-scale operations and faster-than-expected improvement in credit quality.
Through the sale of its non-core assets, BofA has been striving hard to soar up its capital levels and pass the fourth round stress test to be conducted by the Federal Reserve. However, the company will have an even higher stumbling block to clear this time as it has significant exposure to the stressed European countries. Naturally, its chances of passing the test and gaining eligibility to enhance shareholders value are rather dim.
The shares of BofA retain a Zacks #3 Rank, which translates into a short-term Hold rating.
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