By As earnings season for banks kicks off, Bank of America (ticker: BAC) is preparing to reveal its second quarter results on Tuesday. Wall Street analysts are expecting an 11% jump in profit, with figures projected to reach $6.9 billion, compared to $6.2 billion in the same quarter last year. This translates to earnings of $0.84 per share, based on an estimated revenue of $25 billion, according to FactSet.
The main driver of profit gains at Bank of America is expected to be an increase in net interest income. Net interest income refers to the difference between the interest earned by banks on assets like loans and the interest paid out on deposits. Analysts predict that the bank’s net interest income will rise to $14.2 billion, up from $12.4 billion, as the bank continues to benefit from higher interest rates.
Bank of America will be under scrutiny not only for its earnings but also for its preparations in the face of a potential economic downturn. Analysts anticipate that the bank’s net charge-offs, which represent the portion of loans unlikely to be repaid, will increase to $950 million from $571 million. Additionally, the bank is expected to set aside $366 million in reserves for soured loans.
Last week, JPMorgan Chase (JPM) and Wells Fargo (WFC) impressed Wall Street with their respective second quarter results, with profit gains of 67% and 57% mainly due to increased net interest income.
Morgan Stanley (MS) is also scheduled to release its Q2 results on Tuesday, while Goldman Sachs (GS) will share its results on Wednesday.
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