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Subdued Trading to Hurt Bank of America's (BAC) Q3 Earnings
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The performance of Bank of America’s (BAC - Free Report) trading business (constituting a significant portion of its top line) is expected to have been weak in the third quarter of 2023.
BAC is slated to report quarterly numbers on Oct 17, before market open.
Market volatility and client activity were subdued in the third quarter. While the risk of a near-term recession has faded, an economic slowdown, the Federal Reserve’s hawkish monetary policy and other geopolitical issues were concerning in the quarter, which led to ambiguity among investors.
These factors resulted in lower volatility in the equity markets and other asset classes, including commodities, bonds and foreign exchange. Hence, because of subdued volatility and muted client activity, along with the impact of seasonality, 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 the company’s total sales and trading revenues of $3.94 billion for the third quarter suggests a 3.8% decline from the prior-year quarter’s reported number. Our estimate for the metric is the same as the consensus number.
Q3 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for BAC’s third-quarter earnings is pegged at 80 cents, which has moved 1.2% lower over the past seven days. The estimate indicates a decline of 1.2% from the prior-year quarter reported number. Our estimate for earnings is 78 cents.
The consensus estimate for sales of $25.1 billion indicates 2.6% year-over-year growth. Our estimate for sales is $24.6 billion, implying a marginal rise from the prior-year quarter’s reported number.
Bank of America Corporation Price and EPS Surprise
Click here to learn about the other factors that are likely to have impacted BAC’s overall performance in the third quarter.
Our Take
Apart from a weak trading business, muted investment banking performance is expected to have hurt the Zacks Rank #3 (Hold) company’s third-quarter numbers. Further, higher provisions and rising expenses are anticipated to have acted as spoilsports. Nevertheless, higher 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 firms like Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) . Earnings of GS and MS are also not likely to have received much support from their trading performances in the September-ended quarter.
While Goldman is scheduled to report third-quarter 2023 results on Oct 17, Morgan Stanley will come out with the quarterly figures on Oct 18.
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Subdued Trading to Hurt Bank of America's (BAC) Q3 Earnings
The performance of Bank of America’s (BAC - Free Report) trading business (constituting a significant portion of its top line) is expected to have been weak in the third quarter of 2023.
BAC is slated to report quarterly numbers on Oct 17, before market open.
Market volatility and client activity were subdued in the third quarter. While the risk of a near-term recession has faded, an economic slowdown, the Federal Reserve’s hawkish monetary policy and other geopolitical issues were concerning in the quarter, which led to ambiguity among investors.
These factors resulted in lower volatility in the equity markets and other asset classes, including commodities, bonds and foreign exchange. Hence, because of subdued volatility and muted client activity, along with the impact of seasonality, 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 the company’s total sales and trading revenues of $3.94 billion for the third quarter suggests a 3.8% decline from the prior-year quarter’s reported number. Our estimate for the metric is the same as the consensus number.
Q3 Earnings & Revenue Growth Expectations
The Zacks Consensus Estimate for BAC’s third-quarter earnings is pegged at 80 cents, which has moved 1.2% lower over the past seven days. The estimate indicates a decline of 1.2% from the prior-year quarter reported number. Our estimate for earnings is 78 cents.
The consensus estimate for sales of $25.1 billion indicates 2.6% year-over-year growth. Our estimate for sales is $24.6 billion, implying a marginal rise from the prior-year quarter’s reported number.
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 in the third quarter.
Our Take
Apart from a weak trading business, muted investment banking performance is expected to have hurt the Zacks Rank #3 (Hold) company’s third-quarter numbers. Further, higher provisions and rising expenses are anticipated to have acted as spoilsports. Nevertheless, higher 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 firms like Goldman Sachs (GS - Free Report) and Morgan Stanley (MS - Free Report) . Earnings of GS and MS are also not likely to have received much support from their trading performances in the September-ended quarter.
While Goldman is scheduled to report third-quarter 2023 results on Oct 17, Morgan Stanley will come out with the quarterly figures on Oct 18.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.