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Impressive Trading Performance to Aid BofA's (BAC) Q4 Earnings
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Bank of America’s (BAC - Free Report) trading business (constituting a significant portion of its top line) is expected to have been a bright spot in the fourth quarter of 2022. Like the first three quarters of 2022, market volatility and client activity were robust in the fourth quarter.
The developments, including Russia’s invasion of Ukraine and continued supply-chain disruptions, led to ambiguity among investors. Also, the ultra-aggressive stance of the central banks across the globe to control inflation and ensuing fears of an economic slowdown/recession drove client activity and trading volumes.
These factors led to heightened volatility in the equity markets and other asset classes, including commodities, bonds and foreign exchange. Hence, BofA is likely to have witnessed growth in trading revenues in the quarter under review.
The Zacks Consensus Estimate for BAC’s fourth-quarter trading revenues of $3.72 billion suggests a rise of 26.8% from the prior-year quarter’s reported number. Our estimate for the metric is the same as the consensus number.
At an investor conference in December 2022, BofA CEO Brian Moynihan stated that trading revenues would grow 10-15% (with major support from fixed-income trading) year over year.
Q4 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 78 cents, which has witnessed a downward revision of 4.9% over the past seven days. The estimated figure suggests a fall of 4.9% from the year-ago reported number. Our estimate for earnings is 80 cents.
The consensus estimate for sales of $24.21 billion indicates a 9.8% year-over-year rise. Our estimate for sales is $24.19 billion, suggesting a rise of 9.7%.
Click here to learn about the other factors that are likely to have impacted BAC’s overall performance.
Our Take
Apart from a robust trading business, overall growth in loans and higher interest rates are expected to have supported the Zacks Rank #3 (Hold) stock’s fourth-quarter performance. However, not-so-impressive investment banking performance is likely to have been a headwind.
Trading revenues constitute a major portion of the total revenues for other major banks, including Citigroup (C - Free Report) and Morgan Stanley (MS - Free Report) . Earnings of C and MS are also likely to have received support from strong trading performance in the December-end quarter.
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Impressive Trading Performance to Aid BofA's (BAC) Q4 Earnings
Bank of America’s (BAC - Free Report) trading business (constituting a significant portion of its top line) is expected to have been a bright spot in the fourth quarter of 2022. Like the first three quarters of 2022, market volatility and client activity were robust in the fourth quarter.
The developments, including Russia’s invasion of Ukraine and continued supply-chain disruptions, led to ambiguity among investors. Also, the ultra-aggressive stance of the central banks across the globe to control inflation and ensuing fears of an economic slowdown/recession drove client activity and trading volumes.
These factors led to heightened volatility in the equity markets and other asset classes, including commodities, bonds and foreign exchange. Hence, BofA is likely to have witnessed growth in trading revenues in the quarter under review.
The Zacks Consensus Estimate for BAC’s fourth-quarter trading revenues of $3.72 billion suggests a rise of 26.8% from the prior-year quarter’s reported number. Our estimate for the metric is the same as the consensus number.
At an investor conference in December 2022, BofA CEO Brian Moynihan stated that trading revenues would grow 10-15% (with major support from fixed-income trading) year over year.
Q4 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 78 cents, which has witnessed a downward revision of 4.9% over the past seven days. The estimated figure suggests a fall of 4.9% from the year-ago reported number. Our estimate for earnings is 80 cents.
The consensus estimate for sales of $24.21 billion indicates a 9.8% year-over-year rise. Our estimate for sales is $24.19 billion, suggesting a rise of 9.7%.
Click here to learn about the other factors that are likely to have impacted BAC’s overall performance.
Our Take
Apart from a robust trading business, overall growth in loans and higher interest rates are expected to have supported the Zacks Rank #3 (Hold) stock’s fourth-quarter performance. However, not-so-impressive investment banking performance is likely to have been a headwind.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
Trading revenues constitute a major portion of the total revenues for other major banks, including Citigroup (C - Free Report) and Morgan Stanley (MS - Free Report) . Earnings of C and MS are also likely to have received support from strong trading performance in the December-end quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.