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Will Bank of America Continue to Beat Estimates?


Apr. 12 2019, Published 7:21 a.m. ET

What to expect from Q1

Bank of America (BAC) is slated to announce its first-quarter results on Tuesday, April 16. Similar to its peers, analysts expect the bank’s revenue and EPS growth rate to slow down significantly in the first quarter. Bank of America’s revenue is likely to benefit from growth in lending and deposits. Meanwhile, higher asset management fees and increased card income are expected to support first-quarter revenues further. However, analysts expect Bank of America’s top line to stay flat as loan spread compression and increased funding costs in global markets could hurt.

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Analysts expect challenges in market-sensitive products and heightened competition to continue to take a toll on the top line of banks. Also, the Fed’s pause on further rate hikes remains a concern. Citigroup (C), Goldman Sachs (GS), and Morgan Stanley (MS) are expected to mark a YoY decline in first-quarter revenues. Meanwhile, bottom-line growth is projected to decelerate in the absence of benefits from a lower effective tax rate.

Analysts expect Bank of America to post YoY improvement in the bottom line, reflecting tight expense management and share buybacks. However, tough YoY comparisons are likely to limit the EPS growth rate.

Consensus estimates

Bank of America surpassed analysts’ estimates both on the revenues and earnings front in the past several quarters thanks to higher interest rates, credit offtake, and growth in deposits. Meanwhile, higher non-interest income further supported revenue growth. Operating leverage, share repurchases, and a lower effective tax rate drove the bank’s better-than-expected bottom-line results in the past quarters.

As for the first quarter, analysts expect Bank of America’s revenues to stay flat at $23.3 billion. Meanwhile, adjusted earnings are projected to be $0.66, which implies YoY growth of about 6%.


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