Bank of America Falls 5% as CEO Warns of 10-20% Drop in Investment Banking Fees

EarningsAnalystPrice Action Impact 4
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Bank of America CEO Brian Moynihan said the bank's investment banking fees are on pace to reach $1.6 billion to $1.8 billion in the third quarter, down about 10% to 20% from the $2 billion it earned in the same quarter last year, sending the stock down roughly 5% at Monday's close. The broader investment banking market is on pace to be down roughly 10%, according to Dealogic data, and Moynihan said at a Barclays financial services conference that the bank is not as well-positioned in some of the businesses that have more activity, though the deal pipeline remains strong. Bank of America's sales and trading business is poised to be flat from a year ago, with financing and prime brokerage activity that boosted earlier results cooling over the summer as investors pulled back on risk, a downshift Moynihan acknowledged will make it harder for the Charlotte, North Carolina-based bank to show revenue growing faster than expenses in the period. Shares of other Wall Street banks also tumbled on Monday, with Goldman Sachs and Morgan Stanley falling 4% and 3% while JPMorgan Chase, Citigroup and Wells Fargo were down between 1% and 2%. At the same conference, Citigroup CFO Gonzalo Luchetti said markets revenue is tracking toward mid-single-digit growth from a year ago, helped by equities, financing and foreign exchange, and that investment banking revenue should rise by the low single digits with potential upside depending on deals completed before quarter-end. Moynihan was more upbeat on the bank's Main Street operations, saying loans and deposits are growing and net interest income is tracking in line with expectations, and that he feels very good about the underlying US economy even if the Federal Reserve raises interest rates this week.

Impact on stocks 6

Financials▼ · 4 stocks
Bank of America Corp
BAC
▼ NegativeCapitalrelevance

CEO Moynihan said Q3 investment banking fees are on pace to fall 10-20% to $1.6-1.8B, pressuring revenue growth versus expenses.

Digital Finance & Tokenization▲ · 2 stocks
Citigroup Inc.
C
▲ PositiveCapitalrelevance

At the same conference, Citigroup CFO Luchetti said markets revenue is tracking toward mid-single-digit growth and investment banking revenue should rise by low single digits.

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