Bank of America Sets Ambitious Profitability Target Amidst Competitive Tides

Bank of America has raised its profitability target as part of a strategy to grow market share and compete with top Wall Street banks. This includes tech investments and expansion into new markets, with a focus on boosting return on tangible common equity and increasing its investment banking and trading market share.

Bank of America set a new profitability target aiming to bridge the gap with its Wall Street peers. CEO Brian Moynihan announced plans for tech investments and market expansion during the first investor day since 2011, reassuring concerns over the firm's returns.

The bank increased its target for return on tangible common equity (ROTCE) to 16% to 18%, a noticeable jump from the previous mid-teens forecast. This move comes as larger competitors like JPMorgan report superior ROTCE rates. Analysts suggest BofA's targets are within reach, though potentially could have been more ambitious.

On the trading and investment banking front, Bank of America seeks to boost its share by 50 to 100 basis points in the next three to five years. Despite moderate early stock reactions, the bank eyes market expansions in key U.S. states, aiming for long-term growth. Consumer spending and credit are proving steady supports amidst broader economic uncertainties.

(With inputs from agencies.)