BofAs Consumer And Real Estate Woes – US-FOREX.US
Paul Miller of FBR Capital Markets expects strong top-line numbers from Bank of America
on Friday, especially coming out of Merrill Lynch. “It was much more active in the second quarter,” Miller said. “Trading revenue from Goldman Sachs
and JPMorgan Chase
were strong, and I don’t expect anything different from BofA.”On average, Wall Street analysts expect BofA to report earnings of 28 cents per share. JPMorganChase and Goldman both reported impressive second quarter results. The difference between BofA and JPMorgan though is that BofA has more consumer credit exposure. Further, Miller noted, unlike JPMorgan, BofA is loaded with exposure to the troubled commercial real estate market. Friday will also be a major test for BofA’s chief executive Ken Lewis, whose leadership has been brought under question by shareholders. BofA has fared relatively well over the course of the year, falling “only” 6.8%, while other big banks like Wells Fargo
and Citigroup
have slid 16.0% and 54.7%, respectively. JPMorgan meanwhile has risen 13.3%. The SPDR KBW Bank
exchange-traded fund, which follows the banking industry, has fallen 15.5% in 2009, while the Financial Select Sector SPDR
ETF has slipped 3.4%. BofA’s report comes as its acquisition of Merrill Lynch is under scrutiny. On Thursday, former Treasury Secretary Hank Paulson revealed he pressured Lewis to not back out of BofA’s acquisition of the troubled brokerage house. In a lengthy hearing before Congress, Paulson defended his actions as appropriate, and in the best interest of both the country and the two companies.
Meanwhile, Representative Ed Towns, Chairman of the Committee on Oversight and Government Reform, announced on Wednesday that he sent a letter to Lewis regarding recent reports that BofA is not planning to pay the government for financial protection it provided against the bank’s toxic assets. Towns said he has requested Lewis provide him an update on the dispute by Thursday.