The banking earnings season got off to a good start last week, and Tuesday will show whether
Bank of America
can maintain momentum.
Wall Street expects Bank of America’s (ticker: BAC) profit to jump 11% to $6.9 billion from the year-ago quarter, which posted a profit of $6.2 billion of dollars. That equates to earnings of $0.84 per share on projected revenue of $25 billion, according to analysts polled by FactSet.
An increase in net interest income – or the gap between interest banks earn on assets, such as loans, and interest paid on deposits – is expected to drive profit gains. Analysts expect Bank of America’s net interest income to be $14.2 billion, down from $12.4 billion, as the bank is expected to continue to benefit from higher interest rates.
(WFC) wowed Wall Street with its second-quarter results last week, posting profit gains of 67% and 57%, respectively, largely on the back of higher net interest income.
While Wall Street has high hopes for earnings this quarter, close attention is also being paid to how banks could prepare for an economic slowdown. Bank of America is expected to show net write-offs – or the portion of loans that are unlikely to be repaid – increased to $950 million from $571 million previously. Analysts also expect the bank to add $366 million to its reserves for degraded loans.
In addition to revenue, Bank of America may also have to answer questions about a recent settlement reached with the Consumer Financial Protection Bureau regarding fees incorrectly charged to customers and the misuse of customer information to open accounts. without the customer’s consent. Since the conduct complained of by the CFPB, Bank of America has reduced or eliminated its so-called “junk fees.”
Morgan Stanley (MS) also releases its results on Tuesday.
(GS) shares its results on Wednesday.
Write to Carleton English at firstname.lastname@example.org