Summary Bank of America has a strong efficiency ratio compared to competitors, however other banks are taking actions to close the gap. The bank's return on equity could use some work, therefore management is buying back billions of shares to lower total equity. Although the bank is set to experience growing fundamentals due to rising interest rates, the high multiples may be too much for some to handle.

Bank of America (NYSE:BAC) is a strong consumer bank with a great efficiency ratio. However, its ROE could use some work. Management is attempting to fix this by buying back shares to reduce the company's total equity, however Wells Fargo has a higher buyback ratio and could outperform here. Furthermore, Wells Fargo (WFC) is reducing its headcount to lower noninterest expenses and improve its efficiency ratio, similar to Bank of America's previous actions. Although Bank of America is set to thrive due to higher net interest income caused by higher interest rates, the much higher multiples the stock trades at might be too much for many investors to handle.

Bank of America Vs. The Other Big Banks

To truly see how Bank of America holds up against the other big banks in the market, we must compare each bank's metrics. To do so, we will first compare the banks' efficiency ratios. Then we will move on to return on equity. Next we will cover the share buybacks and dividends. Finally, we will end with the valuation multiples of the banks.

Bank of America Has One Of The Strongest Efficiency Ratios

The first metric that should be compared across the banking industry is efficiency ratio. Bank of America has one of the best efficiency ratio among the Big Four banks in the United States. Currently, Bank of America's efficiency ratio sits at 63%. This is just worse than industry leader JPMorgan Chase (JPM) at 62%. However, it is better than Citigroup (C) at 69% and much better than Wells Fargo at 76%. Bank of...

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