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Impressive Trading Activities to Aid BofA (BAC) Q1 Earnings

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There has been a substantial surge in client activity in the first quarter of 2020, mainly driven by coronavirus-related concerns. Hence, Bank of America’s (BAC - Free Report) trading revenues (constituting substantial part of the top line) are likely to have improved in the quarter and positively impacted its overall performance. The company’s upcoming results are scheduled to be announced on Apr 15, before the market opens.

Although the year 2020 began on a positive note, coronavirus and concerns surrounding its impact on the economy resulted in a roller coaster ride, with all the major indexes — the S&P 500, Dow Jones and Nasdaq — swinging from new highs to record lows. Owing to such a volatile market performance, investors moved toward safe havens like Treasury bonds and other commodities like gold. Hence, BofA’s equity and fixed income markets revenues are expected to have improved in the to-be-reported quarter.

The Zacks Consensus Estimate for equity trading revenues of $1.24 billion suggests a 21.5% jump on a sequential basis. The consensus estimate for fixed income trading revenues is $2.38 billion, which indicates a surge of 35.4% year over year.

The consensus estimate for trading revenues indicates a rise of 30.3% sequentially.

Overall Earnings & Revenue Growth Expectations

The Zacks Consensus Estimate for BofA’s earnings for the first quarter is pegged at 66 cents, which indicates a decline of 5.7% from the prior-year reported number.

The consensus estimate for sales of $22.5 billion suggests a 2.1% decline on a year-over-year basis.

Apart from trading revenues, a few other factors have also impacted BofA’s overall performance during the first quarter.

Conclusion

A significant rise in trading revenues is likely to have supported the Zacks Rank #5 (Strong Sell) stock’s first-quarter revenues to some extent. However, near-zero interest rates, subdued loan demand and weak investment banking performance are expected to have offset the same.

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

Trading Revenue Expectations for Other Banks

Trading revenues constitute a major portion of total revenues for Goldman Sachs (GS - Free Report) , Citigroup (C - Free Report) and Morgan Stanley (MS - Free Report) . Similar to BofA, impressive trading performance is likely to have provided some support to these banks’ revenues and earnings in the first quarter.

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