Bank of America (BAC) Q3 investment banking fees to drop over 10%

Bank of America is seeing a far more subdued few months for its Wall Street advisory and trading businesses after a blockbuster second quarter, CEO Brian Moynihan told analysts Monday.

Investment banking fees will likely decline by more than 10% in the third quarter from the year-earlier period, while trading revenue will be roughly flat, Moynihan said at a conference. That compares to a second quarter in which the bank posted a 50% jump in investment banking fees and a 33% jump in trading revenue.

“What we’re seeing is the market generally in investment banking is down 10%,” Moynihan said, citing Dealogic data. “We’re not as well positioned in some of the businesses that have more activity, so we’ll be down probably a bit more than that.”

Bank of America shares were down 5% in afternoon trading Monday following Moynihan’s comments.

The muted outlook from the country’s second-largest bank by assets could be an early signal that Wall Street’s AI-fueled advisory and trading boom might have hit turbulence.

While Moynihan pointed to a robust deal pipeline, particularly in middle-market investment banking, the projected double-digit decline in investment banking may make investors wonder if the industry’s surge in capital markets activity will prove short-lived.

Later Monday, Citigroup CFO Gonzalo Luchetti told analysts that investment banking is tracking for “low single digit” revenue growth in the third quarter, while trading was heading for “mid single digit” revenue growth.

Those figures could climb if Citigroup’s bankers and traders end the quarter on a strong note, he said.

“September is a key month,” Luchetti said. “These few weeks are very meaningful.”