(Changes source, adds analyst’s comments, background, share movement)
Dec 5 (Reuters) - UBS expects Bank of America Corp (BAC.N) to further cut its dividend to boost the value of its tangible common equity.
Analyst Matthew O’Connor said in a note to clients that the company could face credit and mark-to-market losses of about $9 billion in total.
The brokerage said the bank’s estimated tangible common equity of 3.2 percent was a bit low and a 50 percent cut in dividend could prop it up to 3.5 percent by 2009 and 4.2 percent by 2010.
“While there may not be pressure from regulators for banks to raise common equity right now, over time we expect most banks to be pressured to boost common equity,” O’Connor said.
The company had cut its quarterly dividend by 50 percent to 32 cents a share in October as it raced to conserve cash amid the credit markets’ seizure.
The analyst, who had previously projected a fourth-quarter profit of 23 cents a share for the bank, now expects it to break even on a per-share basis.
O’Connor also cut his 2009 profit estimates for Bank of America by $1 to $1.20 a share.
He cut his price target on the stock by $1 to $14, while maintaining his “neutral” rating.
Bank of America shares were up half a percent at $14.39 on the New York Stock exchange. (Reporting by Anurag Kotoky in Bangalore; Editing by Anil D’Silva)