Bank of America (BAC.N) expects its investment banking fees to decline by at least 10% in the third quarter, whilst sales and trading revenue is projected to remain flat, Chief Executive Officer Brian Moynihan stated on Monday. Bank of America is a major American multinational investment bank and financial services holding company. It provides a wide range of banking, investing, asset management, and other financial services. Shares extended losses after his comments, dropping over 5% by late afternoon trade, with the broader S&P 500 banking index (.SPXBK) also seeing a 2.7% decline.
Moynihan projected investment banking revenue to be between $1.6 billion and $1.8 billion for the third quarter, a decrease from $2 billion recorded in the same period last year. Speaking at the Barclays global financial services conference, he noted, “What we’re seeing is the market generally in investment banking is down 10% or so.” Moynihan indicated Bank of America might experience a slightly larger dip, adding, “We’ll be down probably a bit more than that.” He also reiterated expectations for sales and trading revenue to be roughly flat in the third quarter.
Looking ahead, Moynihan mentioned that the deals pipeline remains robust. However, he cautioned that potential interest rate increases could slow financing demand. This comes as global brokerages anticipate the Federal Reserve will raise rates this year, driven by stronger-than-expected inflation readings. Despite these concerns, Moynihan expressed optimism regarding consumer behaviour, noting spending remains strong and credit quality is good. “We feel very good about the underlying U.S. economy,” he concluded.
