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Subdued Trading to Hurt Bank of America's (BAC) Q2 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 weak spot in the second quarter of 2023. Unlike the prior few quarters, when huge market volatility and client activity drove markets revenues, capital markets were subdued this time around.
BAC is slated to report the quarterly numbers on Jul 18, before market open.
Market volatility and client activity were muted in the second quarter due to the Congressional debate over the debt ceiling. Also, the risks of an economic downturn/recession, the Federal Reserve’s hawkish monetary policy stance to stem out “persistent” inflation and geopolitical concerns led to ambiguity among investors.
These factors, thus, resulted in lower volatility in equity markets and other asset classes, including commodities, bonds and foreign exchange. Hence, Bank of America is likely to have recorded weak markets revenues in the to-be-reported quarter.
Further, tougher comps from the prior year are expected to have weighed on BAC’s year-over-year performance. The Zacks Consensus Estimate for total sales and trading revenues of $4.14 billion suggests a marginal decline from the prior-year quarter’s reported number. Our estimate for the metric is the same as the consensus number.
Q2 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for second-quarter earnings is pegged at 84 cents, which has moved 1.2% lower over the past 30 days. The estimate indicates growth of 15.1% from the prior-year quarter reported number. Our estimate for earnings is 83 cents.
The consensus estimate for sales of $24.97 billion indicates 10% growth. Our estimate for sales is $24.77 billion, implying a rise of 9.2%.
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
Apart from a weak trading business, muted investment banking performance is expected to have hurt this Zacks Rank #3 (Hold) company’s second-quarter numbers. Further, higher provisions and rising expenses might have acted as spoilsports. On the other hand, modest loan demand and high interest rates are likely to have provided much-needed support to BAC’s quarterly performance.
Similar to BAC, trading revenues constitute a major part of total revenues for other banks like Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) . Earnings of GS and MS are less likely to have received support from weak trading performance in the June-ended quarter.
While Goldman is scheduled to report second-quarter 2023 results numbers on Jul 19, Morgan Stanley will come out with the quarterly figures on Jul 18.
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Subdued Trading to Hurt Bank of America's (BAC) Q2 Earnings
Bank of America’s (BAC - Free Report) trading business (constituting a significant portion of its top line) is expected to have been a weak spot in the second quarter of 2023. Unlike the prior few quarters, when huge market volatility and client activity drove markets revenues, capital markets were subdued this time around.
BAC is slated to report the quarterly numbers on Jul 18, before market open.
Market volatility and client activity were muted in the second quarter due to the Congressional debate over the debt ceiling. Also, the risks of an economic downturn/recession, the Federal Reserve’s hawkish monetary policy stance to stem out “persistent” inflation and geopolitical concerns led to ambiguity among investors.
These factors, thus, resulted in lower volatility in equity markets and other asset classes, including commodities, bonds and foreign exchange. Hence, Bank of America is likely to have recorded weak markets revenues in the to-be-reported quarter.
Further, tougher comps from the prior year are expected to have weighed on BAC’s year-over-year performance. The Zacks Consensus Estimate for total sales and trading revenues of $4.14 billion suggests a marginal decline from the prior-year quarter’s reported number. Our estimate for the metric is the same as the consensus number.
Q2 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for second-quarter earnings is pegged at 84 cents, which has moved 1.2% lower over the past 30 days. The estimate indicates growth of 15.1% from the prior-year quarter reported number. Our estimate for earnings is 83 cents.
The consensus estimate for sales of $24.97 billion indicates 10% growth. Our estimate for sales is $24.77 billion, implying a rise of 9.2%.
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
Apart from a weak trading business, muted investment banking performance is expected to have hurt this Zacks Rank #3 (Hold) company’s second-quarter numbers. Further, higher provisions and rising expenses might have acted as spoilsports. On the other hand, modest loan demand and high interest rates are likely to have provided much-needed support to BAC’s quarterly performance.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
Similar to BAC, trading revenues constitute a major part of total revenues for other banks like Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) . Earnings of GS and MS are less likely to have received support from weak trading performance in the June-ended quarter.
While Goldman is scheduled to report second-quarter 2023 results numbers on Jul 19, Morgan Stanley will come out with the quarterly figures on Jul 18.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.