What to Watch For in Bank of America Earnings
16 July 2018 - 2:29AM
Dow Jones News
By Rachel Louise Ensign
Bank of America Corp. is expected to report its second-quarter
results before the market opens Monday. Here's what you need to
know.
1. Earnings expected to rise
Earnings of 57 cents a share is the consensus of analysts
surveyed by Thomson Reuters, compared to 44 cents the company
earned in the same period a year ago.
2. Rates Benefit
Bank of America is seen by investors as one of the lenders that
benefits most when rates rise. In the second quarter, the Federal
Reserve raised its benchmark rate for a seventh time in its most
recent campaign. Keep an eye on how much this lifts profits from
lending at the bank.
3. Stalled Stock
If Bank of America's earnings meet or beat expectations, as they
have in recent quarters, will it be enough to finally make
investors enthusiastic about the bank's shares again? The lender's
stock rose 74% between the 2016 presidential election and the end
of 2017. But so far in 2018, it is down slightly.
4. Curve Ball
Investors are pessimistic about bank stocks for a number of
reasons, including the fact that the spread between short- and
longer-term Treasury yields has narrowed, a phenomenon known as a
flattening of the yield curve. On Monday's analyst call, executives
may weigh in with new details on specifically how this flatter
curve could affect the bank's earnings in the future.
5. Deposit Rates
Most banks have managed to avoid passing all of the boost from
higher rates on to deposit customers, but Bank of America has been
particularly stingy, paying just 0.30% on U.S. interest bearing
deposits in the first quarter. Since retail customers keep bringing
more money to the bank despite its low deposit rates, the lender
has had little incentive to pay more.
Write to Rachel Louise Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
July 15, 2018 12:14 ET (16:14 GMT)
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