Bank of America Reports Earnings Tuesday. What to Expect.

An increase in net interest income—or the spread between the interest banks earn on assets, such as loans, versus the interest paid out on deposits—is expected to be the driver of profit gains. Analysts project Bank of America’s net interest income to be $14.2 billion, up from $12.4 billion as the bank is still expected to benefit from higher interest rates.

JPMorgan Chase

(JPM) and

Wells Fargo

(WFC) wowed Wall Street with their second quarter results last week, posting profit gains of 67% and 57%, respectively thanks in large part to a surge in net interest income.

While Wall Street has high hopes for profits this quarter, there is also attention being paid to how banks may be preparing for an economic downturn. Bank of America is expected to show that net charge-offs—or the portion of loans believed unlikely to be repaid—increased to $950 million, up from $571 million. Analysts also expect the bank will add $366 million to its reserves for soured loans.

In addition to earnings, Bank of America may also have to field questions about a recent settlement it reached with the Consumer Financial Protection Bureau over fees that were erroneously charged to customers and the misappropriation of client information to open accounts without the client’s consent. Since the conduct called out by the CFPB, Bank of America has lowered or eliminated its so-called “junk fees.”

Morgan Stanley (MS) also posts results Tuesday.

Goldman Sachs

(GS) shares its results Wednesday.

Write to Carleton English at [email protected]