Bank Of America Heads Into Earnings With A New Risk On The Table: Credit Card Interest Rate Cap

Bank of America’s fourth quarter results will provide an understanding on how consumers are withholding given the current macro uncertainty.

• Bank of America shares had closed down over 1% on Tuesday following U.S. President Donald Trump’s proposed credit card interest-rate cap.
• Bank of America is expected to post a revenue of $27.74 billion during the fourth quarter by Wall Street analysts, according to data compiled by Fiscal AI.
• On Tuesday, JPMorgan’s CFO Jeremy Barnum said that if the credit card interest rate cap goes through, people will lose access to credit on “a very, very extensive and broad basis.”

After JPMorgan & Chase’s mixed results and the bank’s stock ending in red on Tuesday, all eyes have now turned to Bank of America’s earnings, which would give more insight into how the investment banking segment performed in the latest quarter.

Bank of America shares had closed down over 1% on Tuesday following U.S. President Donald Trump’s proposed credit card interest-rate cap. Last week, Trump said that he was considering a one-year cap of 10% on credit card interest rates, calling current rates of 20%–30% “excessively high.”

The bank’s shares were flat in premarket trading on Wednesday. The stock has witnessed three straight sessions of losses.

Wall Street’s BofA Expectations

Bank of America is expected to post a revenue of $27.74 billion during the fourth quarter by Wall Street analysts' estimates, according to data compiled by Fiscal AI. The company's earnings per share are estimated to be $0.95 for the quarter.

Last week, HSBC analyst Saul Martinez upgraded Bank of America ‘buy’ from ‘hold’ with a $50 price target, according to TheFly. The firm noted that the recent pullback provides an opportunity to add exposure to “a market leader with an attractive earnings and profitability outlook” and at an attractive valuation.

Goldman Sachs said that Bank of America's net interest income is expected to grow about 7% year over year through 2026, outpacing large-bank peers and consensus. This growth would be driven by favorable deposit pricing, stronger loan and deposit growth, and accretive asset repricing, the firm said.

JPM On Credit Card Rate Cap

On Tuesday, JPMorgan’s Chief Financial Officer, Jeremy Barnum, said that if the credit card interest rate cap goes through, people will lose access to credit on “a very, very extensive and broad basis,” especially the people who need it the most, ironically.

“So that's a pretty severely negative consequence for consumers and, frankly, probably also a negative consequence for the economy as a whole right now,” Barnum said during a post-earnings call.

Wall Street investors and analysts have been closely watching for comments from big bank executives on their plan to respond to the proposed credit card interest-rate cap.

What Is Retail Thinking?

Retail sentiment on Bank of America improved to ‘bullish’ from ‘bearish’ territory a day ago, with message volumes at ‘high’ levels, according to data from Stocktwits.

While sentiment on JPMorgan jumped to ‘extremely bullish’ from ‘bearish’ a week ago, with volumes of messages at ‘extremely high’ levels.

Shares of Bank of America have gained nearly 16% and JPM stock has jumped over 23% in the last 12 months.

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