BofA: Room for more cuts in compensation

• "Investors want to see more," says Morgan Stanley's Betsy Grasek, taking note of Bank of America's (BAC +1.5%) driving down of core expenses and legacy asset costs. The bank's compensation costs to revenue ratio, however, is the highest among both money center banks and the super-regionals (40% vs. median 34%). "We believe they have room to bring this down, especially in a low revenue environment."
• She maintains an Overweight rating and $20 price target.
• Oppenheimer also maintains its positive rating despite what it calls a "dreadful quarter" for BofA. The "one-time" charges of $1.5B for retirement-eligible incentive costs and market-related adjustements to NII may not be so "one-time," says the team, also noting that core expenses are not falling inline with revenue.
• Previously: Stronger mortgage numbers, but weaker trading results as BofA beats estimates (April 15)
• Previously: Citi: BofA a buy on valuation and rate hikes (April 15)