BAC’s Total Managed Net Chargeoffs Ratio May Peak in 2Q10

Analyst Vivek Juneja of JP Morgan maintains his "overweight" rating on Bank of America (NYSE: BAC), while reducing his estimates for the company. The target price for BAC is set to $21.50.

According to JP Morgan, BAC’s earnings are likely to be affected by lower than expected net interest income run-rate owing to tough interest rate environment and shrinking balance sheet. Pressure on BAC’s earnings may be partly mitigated by a marginal rise in fee income from capital markets and lower-than-expected credit cards related provision expense in 2010, the analyst said.

With improvement in securitized credit card losses, JP Morgan expects Bank of America’s credit costs to fall going forward. BAC’s total managed net chargeoffs ratio is likely to peak in 2Q10, the analyst added.

JP Morgan has reduced its EPS estimates for 2009 and 2010 from $0.45 to $0.39 and from $0.90 to $0.80, respectively.