BoA: Volatility cannot stay as high as it has been in 2Q
Here’s a Thought! 20 July, 2020, by Vladimir Rojankovski, Chief Analyst, Grand Capital
Overall, financial results of the biggest U.S. banks in the second quarter were better than expected, but was given a big boost from the trading profits earned in a very volatile market. The future does not look clear as the banks were forced to build huge pileups of money to provide for future loan losses.
The biggest disappointment was certainly the Bank of America’s recent earnings release. BAC’s earnings per share (EPS) fell 50% over the past year to $0.37, which, however, beat the estimate of $0.27. Revenue of $22.45 billion declined by 3.35% YoY, again, slightly above the consensus estimate of $22.01 billion.
But since stock market investments for banks are the only visible remedy against bad loans, it’s worth to note several high-profile forecasts that in the third and fourth quarters of this year, trading revenues will be at least 20 to 30 percent lower than in the second quarter. Volatility just cannot stay as high as it has been in the second quarter.
Overall, financial results of the biggest U.S. banks in the second quarter were better than expected, but was given a big boost from the trading profits earned in a very volatile market. The future does not look clear as the banks were forced to build huge pileups of money to provide for future loan losses.
The biggest disappointment was certainly the Bank of America’s recent earnings release. BAC’s earnings per share (EPS) fell 50% over the past year to $0.37, which, however, beat the estimate of $0.27. Revenue of $22.45 billion declined by 3.35% YoY, again, slightly above the consensus estimate of $22.01 billion.
But since stock market investments for banks are the only visible remedy against bad loans, it’s worth to note several high-profile forecasts that in the third and fourth quarters of this year, trading revenues will be at least 20 to 30 percent lower than in the second quarter. Volatility just cannot stay as high as it has been in the second quarter.