Two major “American” banks trading under $40 a share. But only one has a future.
The first is Bank of America (BAC: NYSE). A poster child for everything wrong with banking today, they have confessed to millions -- if not billions -- in mortgage-based losses. And that’s the good news! It may be another 18 months or more before U.S. housing “turns the corner.” Take home-based lending out of BAC’s picture and they are left with toasters and free checking.
Now take a look at Brazil’s Banco Bradesco SA (BBD:NYSE). In the fourth quarter of 2007, they reported:
- Net Income: up 21.2% q-o-q (58.5% y-o-y)
- Loan Portfolio: up 12.8% q-o-q (36.5% y-o-y)
- Credit Cards: up 10.2% q-o-q (11.3% y-o-y)
- Savings Deposits: up 8.5% q-o-q (18.8% y-o-y)
Vehicle loans rose 8.3% in the fourth quarter compared to the third quarter (30.3% compared to Q4 2006). Mortgages rose 15.9% versus Q3 2007 (51.1% compared to Q4 2006). Mortgages as corporate loans climbed 17.7% in the fourth quarter versus the third, and a whopping 68.4% as compared to Q4 2006.
Here in the U.S., defaults just hit a 23-year high. But down in Brazil, Banco Bradesco estimates that the number of loans more than 60 days overdue fell to 4% from 4.2% in the previous quarter, but that its allowance capital reached nearly 117% of those loans.
No write-downs. No bailouts.
The choice for how to spend $40 -- or $4,000 -- is obvious
The first is Bank of America (BAC: NYSE). A poster child for everything wrong with banking today, they have confessed to millions -- if not billions -- in mortgage-based losses. And that’s the good news! It may be another 18 months or more before U.S. housing “turns the corner.” Take home-based lending out of BAC’s picture and they are left with toasters and free checking.
Now take a look at Brazil’s Banco Bradesco SA (BBD:NYSE). In the fourth quarter of 2007, they reported:
- Net Income: up 21.2% q-o-q (58.5% y-o-y)
- Loan Portfolio: up 12.8% q-o-q (36.5% y-o-y)
- Credit Cards: up 10.2% q-o-q (11.3% y-o-y)
- Savings Deposits: up 8.5% q-o-q (18.8% y-o-y)
Vehicle loans rose 8.3% in the fourth quarter compared to the third quarter (30.3% compared to Q4 2006). Mortgages rose 15.9% versus Q3 2007 (51.1% compared to Q4 2006). Mortgages as corporate loans climbed 17.7% in the fourth quarter versus the third, and a whopping 68.4% as compared to Q4 2006.
Here in the U.S., defaults just hit a 23-year high. But down in Brazil, Banco Bradesco estimates that the number of loans more than 60 days overdue fell to 4% from 4.2% in the previous quarter, but that its allowance capital reached nearly 117% of those loans.
No write-downs. No bailouts.
The choice for how to spend $40 -- or $4,000 -- is obvious
Carpe Divitiae
