Bank of America Corporation (NYSE: BAC) is slated to report its fourth-quarter 2019 earnings results on Wednesday, January 15, before the market opens. The results will be hurt by lower loans and deposits, asset management fees, a decline in investment banking fees, and leasing-related revenues.
The bottom line will be hurt by an impairment charge related to the notice of termination of the merchant services joint venture at the conclusion of its current term. The provision for credit losses and a shortfall in non-interest income could also impact the bottom line.
For the full year 2019, net interest income is expected to grow by about 1% as compared to 2018. This reflects the expectation for another short-end rate cut in the fourth quarter of 2019, that long-end interest rates remain flat and economic conditions remain stable.
The expected client demand could be increasing the client balances of equities and the levels of inventory in fixed-income, currencies, and commodities (FICC). The continued residential mortgage and commercial loan growth could be driving loans and leases while short-term reinvestments of excess cash will drive the federal funds sold and securities borrowed or purchased under agreements.
On October 28, 2019, the European Union agreed to extend the deadline for the UK’s withdrawal from the EU to January 31, 2020. Despite taking measures to minimize operational disruption and prepare for various potential outcomes, the preparedness of the company’s counterparties and the relevant financial markets infrastructure remain outside its control.
Analysts expect the company’s earnings to decline by 2.90% to $0.68 per share and revenue will decrease by 2.20% to $22.38 billion for the fourth quarter. The company has surprised investors by beating analysts’ expectations in all of the past four quarters. The majority of the analysts recommended a “buy” rating with an average price target of $36.74.
For the third quarter, Bank of America reported a 19% dip in earnings due to higher costs and expenses despite flat revenue. The results reflected its client activity, the expansion of the client base and its ability to gain market share across most of the business. Net interest income and non-interest income remained relatively flat compared to the prior-year quarter.