Bank of America’s CEO Brian Moynihan has told analysts that the bank’s investment banking fees will likely fall by more than 10% in the third quarter, compared with the same period last year. Trading revenue, meanwhile, is expected to be roughly flat. The news sent the company’s shares down 5% in afternoon trading Monday.
Moynihan made the remarks at a conference, where he also cited Dealogic data showing that the broader investment banking market is down 10%. He added that Bank of America is not as well positioned in some of the businesses that have seen more activity, so the decline at the bank will probably be sharper than that average.
“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.”
The warning comes after a strong second quarter for the bank. Investment banking fees jumped 50% in that period, while trading revenue rose 33%. Now the outlook is moving in the opposite direction.
Moynihan’s Numbers
Moynihan’s comments were direct about the scale of the shift. He framed the decline as a correction after a strong start to the year, not a collapse.
He noted that the market as a whole is down 10%, according to Dealogic. But he also acknowledged that Bank of America’s position within that market matters. Some businesses have seen more activity than others, and the bank’s exposure to those areas is not as strong.
The 10% market-wide figure is a useful anchor. It suggests that the decline is industry-wide rather than specific to Bank of America. But Moynihan’s own prediction of a decline “probably a bit more than that” points to a tougher result for the bank specifically.
The Share Price Reaction
Bank of America shares slid 5% in afternoon trading Monday after Moynihan’s comments. The move was immediate and visible, reflecting investor concern about the bank’s guidance.
The sell-off is consistent with how markets respond to earnings guidance that falls short of expectations. When a major bank’s CEO warns of lower fees, investors often adjust their estimates downward, and that adjustment can show up in share price quickly.
What the Decline Means
The projected decline in investment banking fees is significant because it follows a strong second quarter. A 50% jump in fees is notable, and the fact that the bank is now expecting a double-digit decline means the correction is sharp.
Trading revenue, by contrast, is expected to be roughly flat. That suggests the bank’s core commercial banking operations remain stable, even as its advisory business cools.
The difference between the two lines of business matters for how the bank is valued. Investment banking fees are volatile and harder to predict, while trading revenue tends to be steadier. A flat trading line alongside falling advisory fees paints a picture of a bank that is still generating income but with less upside from its most profitable operations.
Citigroup’s Numbers
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.
Luchetti’s comments add context to the broader picture. His outlook is similar in shape to Bank of America’s, with both banks expecting modest gains in investment banking and stronger gains in trading.
The “low single digit” and “mid single digit” growth figures suggest that the other major banks are seeing similar pressure on advisory revenue. A low-single-digit gain is a far cry from the 50% jump Bank of America saw in its second quarter, and it aligns with Moynihan’s prediction of a decline.
September’s Key Month
“September is a key month,” Luchetti said. “These few weeks are very meaningful.”
That remark ties directly into the timing of the quarter. The final weeks of September will determine whether the banks’ projections hold or overshoot. For Citigroup, a strong finish could push its numbers above the low-single-digit guidance.
For Bank of America, the stakes are similar. Moynihan’s warning suggests the bank is braced for a difficult quarter, but a strong September could narrow the gap between expectations and reality.
What Investors Should Watch
The combination of Bank of America’s warning and Citigroup’s guidance suggests that Wall Street’s AI-fueled advisory and trading boom may have hit turbulence. After a blockbuster second quarter, the industry appears to be settling back toward normal levels of activity.
The market-wide decline of 10% cited by Moynihan is a useful benchmark. It shows that the slowdown is not isolated to one bank or one region. If the broader market holds at that level, individual banks that are less exposed to the busiest sectors will feel the pain more acutely.
The Citigroup figures support that reading. Low-single-digit growth on investment banking and mid-single-digit growth on trading are consistent with a market that has slowed rather than collapsed.
Key Facts Box
- Bank of America’s investment banking fees are expected to decline by more than 10% in the third quarter
- Trading revenue is expected to be roughly flat
- Second quarter: investment banking fees up 50%; trading revenue up 33%
- Bank of America shares down 5% in afternoon trading Monday
- Citigroup’s investment banking tracking for “low single digit” revenue growth
- Citigroup’s trading tracking for “mid single digit” revenue growth
- September described by Citigroup CFO Gonzalo Luchetti as “very meaningful”
The Bottom Line
Moynihan’s warning is a reminder that even the strongest quarters can be followed by weaker ones. After a strong second quarter, the bank is now projecting a double-digit decline in fees.
The fact that Citigroup is seeing similar pressure supports the idea that this is an industry-wide correction, not a Bank of America-specific problem. Both banks are seeing investment banking revenues slow, while trading remains steady.
Investors will watch September closely. A strong finish could narrow the gap between expectations and reality, but the guidance is clear: the next quarter will be harder than the last.
The 5% share drop on Monday reflects that reality. When a CEO of this stature warns of lower fees, the market reacts, and the reaction was immediate.
Whether the industry’s surge in capital markets activity proves short-lived is an open question. But the early signal from Bank of America and Citigroup is that the boom may have peaked, at least for now.
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