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Increase in Trading Revenues to Support BofA (BAC) Q4 Earnings

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Similar to the first nine months of 2020, Bank of America’s (BAC - Free Report) trading revenues (constituting a substantial portion of its total revenues) are expected to have witnessed significant improvement in the fourth quarter. Thus, solid trading performance is expected to support the bank’s overall results, scheduled to be announced on Jan 19, before market open.

The lingering concerns related to the impact of the pandemic along with other major developments like the U.S. Presidential elections and the vaccine breakthroughs led to a continued significant rise in market volatility in fourth-quarter 2020. Along with significant volatility, client activity remained strong. Thus, BofA’s trading business is expected to have received a substantial boost in the to-be-reported quarter.

Unlike the first half of the year, when almost all major indexes like the S&P 500, Dow Jones and Nasdaq witnessed a roller coaster ride, swinging from highs to record lows; the fourth quarter mainly witnessed an upswing in equity markets, with the indexes touching new highs. Along with impressive equity markets performance, fixed income trading remained strong, driven by the Federal Reserve’s bond-buying program. Hence, BofA’s equity as well as fixed-income trading revenues is expected to have improved in the fourth quarter.

The Zacks Consensus Estimate for equity trading revenues for the to-be-reported quarter is pegged at $1.12 billion, which suggests an increase of 10.3% from the prior-year quarter’s reported number. Likewise, the consensus estimate for fixed-income trading revenues of $1.95 billion indicates a year-over-year rise of 11%.

The consensus estimate for total trading revenues is pegged at $3.07 billion, suggesting a year-over-year rise of 10.7%.

Overall Earnings & Revenue Growth Expectations

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 56 cents, which suggests a decline of 24.3% from the year-ago reported number.

The consensus estimate for sales of $20.40 billion indicates an 8.7% decline from the year-ago quarter’s reported number.

Bank of America Corporation Price and EPS Surprise


Bank of America Corporation Price and EPS Surprise

Bank of America Corporation price-eps-surprise | Bank of America Corporation Quote

Now, let’s check what other key factors are likely to have influenced BofA’s overall performance in the fourth quarter.


Impressive trading business performance, driven by significant market volatility, and solid investment banking performance are expected to have offered support to this Zacks Rank #3 (Hold) stock’s top-line growth in fourth-quarter 2020. However, its interest income is likely to have been negatively impacted by muted loan growth and low interest rates.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Dates of Other Major Banks

State Street Corporation (STT - Free Report) and The Bank of New York Mellon Corporation (BK - Free Report) are scheduled to release quarterly results on Jan 19 and Jan 20, respectively. KeyCorp (KEY - Free Report) will release numbers on Jan 21.

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