Low Investment Banking will affect Bank of America

The investment banking division, one of Bank of America BAC’s core revenue streams, is not predicted to have fared well in the first quarter of 2022. As a result, the Investment Banking business is unlikely to have contributed assistance to BAC’s earnings, which are scheduled to be reported on April 18. Investment Banking fees are mostly made up of advice fees (derived from mergers and acquisitions and corporate restructuring) and underwriting revenues (equity and debt). Let’s take a look at how they are likely to have been in the upcoming quarter.

After nearly two years of extraordinary performance, deal-making came to a standstill in March. The current Russia-Ukraine war (which has caused choppy trading in global financial markets) and uncertainty over the economic downturn linked to inflation have weighed on corporate attitudes. As a result, both transaction volume and overall deal value decreased in the first quarter.

As a result, BofA’s advice fees are likely to have suffered. Given the aforementioned concerns, stock market performance in the to-be-reported quarter was unsatisfactory, and as a result, IPOs and follow-up equity issuances dried up. However, bond issuances are likely to have been satisfactory. As a result, BofA’s underwriting fees (which account for about 40% of overall Investment Banking fees) are projected to have suffered in the March-end quarter.

The Zacks Consensus Estimate for the company’s first-quarter Investment Banking income of $1.83 billion indicates a 22% reduction from the previous quarter’s reported level.

Expected Earnings and Revenue Growth in the First Quarter –

The Zacks Consensus Estimate for first-quarter earnings is 76 cents, which has been revised down by 2.6 percent in the last 30 days. Furthermore, the predicted value represents an 11.6 percent decrease from the previous year’s reported figure. The average forecast of $23.2 billion in sales is a 1.7 percent increase.

While the Investment Banking business is projected to have performed poorly, good loan demand is predicted to have sustained the first-quarter performance of the Zacks Rank #3 (Hold) company. Furthermore, strong trading performance is likely to have supplied additional assistance