Bank of America earnings: Expect strong trading, weak loan growth

Bank of America Corp. is scheduled to report first-quarter earnings before the bell on Tuesday, and analysts are expecting similar trends to those seen at rivals last week of strong trading profits but weak loan growth.

J.P. Morgan Chase & Co. JPM, +1.03% and Citigroup Inc C, +0.94% reported their numbers last week, and both banks had a strong trading quarter after equity indexes hit repeated records. Their investment-banking divisions benefited from stronger equity capital markets as the initial-public-offering market came back to life after a subdued 2016 and the flow of debt issuance remained strong.

But loan growth was weak, after the Federal Reserve raised interest rates in December and signaled two more rate hikes this year.

“The loan growth deceleration in all of these reports didn’t come as a surprise — we had seen it in Fed data already,” said Sheraz Mian, research director at Zack’s.

Mian noted that some of the explanations offered included lower mortgage activity in the wake of higher rates, weak car-loan demand and strong capital markets activities that encouraged bigger issuers to tap the bond market instead of banks.

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