Bank of America’s BAC trading business (constituting a significant portion of its top line) is expected to have been a bright spot in the first quarter of 2023. Like 2022, huge market volatility (especially in March) and client activity were robust during the quarter. BAC is scheduled to announce the quarterly numbers on Apr 18, before market open.
A number of factors, including the ongoing Russia-Ukraine conflict, continued supply chain disruptions, bank runs, fears of an economic downturn/recession and the central banks’ hawkish monetary policy stance to stem out “sticky” inflation led to ambiguity among investors. These factors led to heightened volatility in equity markets and other asset classes, including commodities, bonds and foreign exchange.
So, BofA is likely to have witnessed growth in trading revenues in the quarter under review. Yet, it will be difficult to compare with last year's quarter numbers, which were very impressive.
This time, equity trading is likely to have been weak amid the turmoil in the banking industry, which led investors to be cautious of trading in the equity markets. Though fixed-income trading performance is likely to have been better than equity trading, it faces tough comparisons from the first quarter of 2022.
The Zacks Consensus Estimate for trading revenues of $4.1 billion suggests a decrease of 13% from the prior-year quarter’s reported number. Our estimate for the metric is $4.06 billion.
Q1 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for first-quarter earnings is pegged at 79 cents, which has witnessed a downward revision of 1.3% over the past seven days. The estimated figure suggests a fall of 1.3% from the year-ago reported number. Our estimate for earnings is 75 cents.
The consensus estimate for sales of $25.07 billion indicates an 8% year-over-year rise. Our estimate for sales is $24.62 billion, suggesting an increase of 6%.
Bank of America Corporation Price and EPS Surprise
Bank of America Corporation price-eps-surprise | Bank of America Corporation Quote
Click here to learn about the other factors that are likely to have impacted BAC’s overall performance.
Our Take
Apart from a decent trading business, overall loan growth and higher interest rates are expected to have supported the Zacks Rank #4 (Sell) stock’s first-quarter performance. However, not-so-impressive investment banking performance and higher provisions are likely to have been headwinds.
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 and Morgan Stanley MS. Earnings of GS and MS are also likely to have received some support from decent trading performance in the March-ended quarter.
While Goldman is scheduled to report first-quarter 2023 results numbers on Apr 18, Morgan Stanley will come out with the quarterly numbers on Apr 19.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
