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Muted Trading Performance to Hurt BofA's (BAC) Q1 Earnings

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Following an impressive 2018 performance driven by significant volatility and higher volumes, client activity slowed down in first-quarter 2019. Hence, Bank of America’s (BAC - Free Report) trading revenues (constituting a substantial part of its top line) will likely get hampered and have an adverse impact on its overall results to be announced on Apr 16, before market open.

Several concerns, including a few lingering ones from the prior quarters like uncertainty related to Brexit and U.S.-China trade war, and expectations of global economic slowdown continued during the first quarter. Further, the U.S. government shutdown and other lingering economic uncertainties had an adverse impact on investors’ sentiments.

Despite these concerns, performance of equity markets was strong. But that was not enough to result in a significant increase in client activity and volumes. Thus, overall volatility remained on a lower side. Additionally, the last-year quarter was usually strong in terms of trading performance.

Therefore, BofA’s trading revenues in the to-be-reported are expected to record muted performance.

Overall Earnings & Revenue Growth Expectations

For BofA, the Zacks Consensus Estimate for earnings of 65 cents reflects 4.8% growth on a year-over-year basis. Also, the consensus estimate for sales of $23.2 billion indicates a 0.5% increase.

Click here to know about the other factors that are likely to impact BofA’s overall results.

Our Take

During the first quarter, the operating backdrop was decent. Modest loan growth and higher rates will likely support this Zacks Rank #3 (Hold) stock’s revenues to some extent. However, lower trading revenues along with dismal growth in investment banking are expected to be major headwinds.

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

Trading Revenue Projections for Other Companies

Trading revenues also form a major portion of total revenues for JPMorgan (JPM - Free Report) , Citigroup (C - Free Report) and Morgan Stanley (MS - Free Report) . Like BofA, dismal trading performance will likely hurt these banks’ revenues and earnings in the first quarter.

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