Bank of America shares drop as it sets aside another $4 billion for coronavirus-related loan losses

Earnings

Brian Moynihan, Bank of America, speaking at the WEF at Davos, January 21, 2020

CNBC

Bank of America is scheduled to report second-quarter earnings before the opening bell on Thursday.

Here’s what Wall Street expects:

Earnings: 27 cents a share, a 64% drop from a year earlier, according to Refinitiv.

Revenue: $22 billion, a 5.3% drop from a year earlier.

Net interest margin: 2.04%, according to FactSet.

Trading revenue: Fixed income $2.63 billion; equities $1.27 billion.

Bank of America has a tough act to follow.  

The second-biggest U.S. bank by assets has a huge retail bank coupled with a global investment bank, much like the larger JPMorgan Chase.

All eyes will be on CEO Brian Moynihan‘s bank after JPMorgan managed to post its biggest quarterly revenue ever despite setting aside $8.9 billion for coronavirus-related loan losses.

Bank of America is considered by analysts to be the most sensitive of large banks when it comes to changes in interest rates, so they will be keen to hear how the lender is navigating the low rate environment.

In May, Moynihan said that he expected trading revenue to rise by “high single digits,” a figure that would pale next to how rivals performed. At JPMorgan, trading revenue surged 79% to a record $9.7 billion, and Goldman produced a 93% increase in trading revenue to $7.2 billion.

On Tuesday, J.P. Morgan and Citigroup both posted profit that beat analysts’ expectations on strong trading and investment banking results, factors that helped Goldman Sachs notch its biggest earnings beat in nearly a decade on Wednesday. Wells Fargo posted its first loss since the financial crisis on loan loss reserves.

Bank of America shares have fallen 30% this year, compared with the 34% decline of the KBW Bank Index.

This story is developing. Please check back for updates.

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