Bank of America Corporation (BAC) will report its Q1 2023 earnings on April 14, before the market opens. The report will be for the fiscal quarter ending Mar 2023. According to Zacks Investment Research, based on 11 analysts’ forecasts, the consensus EPS forecast for this quarter is $0.79, almost no change from $0.8 EPS for the same quarter last year.
Earnings reports published so far show that a rising interest rate environment could help the banks use the opportunity and perform better. However, the question is the possibility of continuing this trend in the long term, as with the higher yields, they must pay a large depositor base to retain those customers. On the other hand, the Federal Reserve’s rate hikes over the past year have increased the bank’s interest margins, helping to earn more on loans than they pay out to depositors. That is why it is projected to see a 30% increase in net interest income among the six largest US lenders compared to last year.
Recessionary fears, a banking crisis, and a slowdown in lending can pressure the Bank of America’s (BAC) net income and revenue, even if it is the US’s second-largest bank by assets. With a 242.94B Market Cap, we expect a 25.25B revenue. The net interest income (NII) also will likely surge 23.5% year-over-year to $14.3 billion, driven primarily by rising interest rates. These incomes and numbers will bring the company’s net interest margin (NIM), a key profitability metric for banks, to 2.2%, from 1.7% a year earlier.
On top of all challenges, the collapse of Silicon Valley Bank and Signature Bank raised fears of contagion throughout the industry, reducing loan demands after rising in the first two months of the year. However, Bank of America was one of the winners, as its credit in the market helped it receive $15 billion in deposit inflows days after SVB’s collapse.
Overall, we are optimistic about the results. From a technical point of view, the BAC share price breached the critical level of $30 in March, and now it is trying to recover above this level again while the MACD signal line and histograms also support the beginning of the Bull Run. However, the bullish trend can only form if the price can move above $34.
