Key facts
- Bank of America expects investment banking fees to drop by at least 10% in Q3.
- Sales and trading revenue is projected to be flat.
- Investment banking revenue is forecast between $1.6 billion and $1.8 billion.
- This represents a decrease from $2 billion in the same period a year earlier.
- The S&P 500 banking index was down 2.7%.
Bank of America anticipates a decline of at least 10% in its investment banking fees for the third quarter, with sales and trading revenue expected to remain flat, according to CEO Brian Moynihan. The comments, made at the Barclays global financial services conference, led to Bank of America shares extending losses, falling over 5% by late afternoon trade, while the broader S&P 500 banking index was down 2.7%.
Moynihan projected third-quarter investment banking revenue to range between $1.6 billion and $1.8 billion, a decrease from the $2 billion earned in the same period last year. He noted that the overall market for investment banking services is down approximately 10%, and Bank of America's specific performance might be slightly lower due to reduced activity in certain business areas.
Despite the projected dip in fees, Moynihan indicated that the deals pipeline remains robust. However, he cautioned that rising interest rates could potentially slow down financing demand. He also expressed optimism about the U.S. economy, citing consistent consumer spending and strong credit quality, which he described as being as good as it has been for a long time.