We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Dismal Investment Banking to Hurt BofA's (BAC) Q1 Earnings
Read MoreHide Full Article
The investment banking (“IB”) business, one of the key revenue sources of Bank of America (BAC - Free Report) , is not expected to have performed impressively in first-quarter 2022. Thus, the IB business is not likely to have provided support to BAC’s results, slated to be announced on Apr 18.
IB fees mainly comprise advisory fees (generated from M&As and business restructuring) and underwriting revenues (equity and debt). Let’s check how these are likely to have been in the to-be-reported quarter.
After an astonishing performance for almost two years, deal-making came to a grinding halt in March. The ongoing Russia-Ukraine conflict (leading to choppiness in the equity markets worldwide) and ambiguity over the economic slowdown tied to inflation weighed on business sentiments. Thus, both deal volume and total deal value witnessed a decline in the first quarter.
Hence, BofA’s advisory fees are likely to have been adversely impacted.
Given the above-mentioned concerns, the equity market performance was disappointing in the to-be-reported quarter and, thus, IPOs and follow-up equity issuances dried up. Then again, bond issuances are likely to have been decent. Thus, BofA’s underwriting fees (accounting for almost 40% of total IB fees) are expected to have been hurt in the March-end quarter.
The Zacks Consensus Estimate for the company’s first-quarter IB income of $1.83 billion suggests a decrease of 22% from the prior quarter’s reported level.
Q1 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for first-quarter earnings is pegged at 76 cents, which has witnessed a downward revision of 2.6% over the past 30 days. Further, the estimated figure suggests a fall of 11.6% from the year-ago reported number.
The consensus estimate for sales of $23.2 billion indicates a 1.7% rise.
Bank of America Corporation Price and EPS Surprise
Click here to know about the other factors that are likely to have impacted BAC’s overall performance.
Our Take
While the performance of the IB business is expected to have been dismal, decent loan demand is expected to have supported the Zacks Rank #3 (Hold) stock’s first-quarter performance. Moreover, robust trading performance is likely to have provided further support.
For JPMorgan (JPM - Free Report) , the performance of its IB business was disappointing, as expected by analysts. JPM’s equity and debt underwriting fees tanked 78% and 20%, respectively on a year-over-year basis. Then again, the company’s advisory fee was somewhat a saving grace, as it rose 18%. Yet, JPMorgan’s total IB fees decreased 31% from the prior-year quarter.
Another investment bank Moelis & Company’s (MC - Free Report) investment banking performance for the to-be-reported quarter is not expected to have been good either. MC is scheduled to report quarterly results on Apr 27.
Image: Bigstock
Dismal Investment Banking to Hurt BofA's (BAC) Q1 Earnings
The investment banking (“IB”) business, one of the key revenue sources of Bank of America (BAC - Free Report) , is not expected to have performed impressively in first-quarter 2022. Thus, the IB business is not likely to have provided support to BAC’s results, slated to be announced on Apr 18.
IB fees mainly comprise advisory fees (generated from M&As and business restructuring) and underwriting revenues (equity and debt). Let’s check how these are likely to have been in the to-be-reported quarter.
After an astonishing performance for almost two years, deal-making came to a grinding halt in March. The ongoing Russia-Ukraine conflict (leading to choppiness in the equity markets worldwide) and ambiguity over the economic slowdown tied to inflation weighed on business sentiments. Thus, both deal volume and total deal value witnessed a decline in the first quarter.
Hence, BofA’s advisory fees are likely to have been adversely impacted.
Given the above-mentioned concerns, the equity market performance was disappointing in the to-be-reported quarter and, thus, IPOs and follow-up equity issuances dried up. Then again, bond issuances are likely to have been decent. Thus, BofA’s underwriting fees (accounting for almost 40% of total IB fees) are expected to have been hurt in the March-end quarter.
The Zacks Consensus Estimate for the company’s first-quarter IB income of $1.83 billion suggests a decrease of 22% from the prior quarter’s reported level.
Q1 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for first-quarter earnings is pegged at 76 cents, which has witnessed a downward revision of 2.6% over the past 30 days. Further, the estimated figure suggests a fall of 11.6% from the year-ago reported number.
The consensus estimate for sales of $23.2 billion indicates a 1.7% rise.
Bank of America Corporation Price and EPS Surprise
Bank of America Corporation price-eps-surprise | Bank of America Corporation Quote
Click here to know about the other factors that are likely to have impacted BAC’s overall performance.
Our Take
While the performance of the IB business is expected to have been dismal, decent loan demand is expected to have supported the Zacks Rank #3 (Hold) stock’s first-quarter performance. Moreover, robust trading performance is likely to have provided further support.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
For JPMorgan (JPM - Free Report) , the performance of its IB business was disappointing, as expected by analysts. JPM’s equity and debt underwriting fees tanked 78% and 20%, respectively on a year-over-year basis. Then again, the company’s advisory fee was somewhat a saving grace, as it rose 18%. Yet, JPMorgan’s total IB fees decreased 31% from the prior-year quarter.
Another investment bank Moelis & Company’s (MC - Free Report) investment banking performance for the to-be-reported quarter is not expected to have been good either. MC is scheduled to report quarterly results on Apr 27.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.