Bank of America (NYSE:BAC) is signaling a weaker third quarter for its Wall Street investment banking business, pressuring the stock and raising questions about the durability of the recent advisory-and-trading boom.
The Charlotte, North Carolina-based bank expects third-quarter investment banking fees to decline by more than 10% from a year earlier. CEO Brian Moynihan said on CNBC that trading revenue should be roughly flat after second-quarter jumps of 50% in investment banking fees and 33% in trading revenue,
Bank of America’s share price was in the red at last check on Monday. The firm’s rivals — Goldman Sachs Group, Inc. (NYSE:GS), Citigroup Inc. (NYSE:C) and Wells Fargo & Co.(NYSE:WFC) — also fell on Moynihan’s comments.
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Moynihan Cuts Q3 Fee Forecast
- In a Monday update, Moynihan projected that Bank of America’s third-quarter investment banking fees will range between $1.6 billion and $1.8 billion, below Wall Street’s $2 billion consensus.
- Moynihan also guided to flat sales and trading revenue after a 33% increase in the second quarter. The outlook has weighed on major financial equities as Bank of America shares retreated from recent levels.
Q2 Beat Came with Fee and Trading Surge
- Back in July, Bank of America topped second-quarter estimates with $1.21 earnings per share and net income rising to $9.1 billion. Investment banking fees rose to $2.1 billion, driven by strength across debt underwriting and advisory services. Trading revenue rose 33% amid Wall Street volatility.
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