Bank of America shares took a notable dive on Monday after CEO Brian Moynihan warned that the firm’s investment banking fees are expected to drop by more than 10 percent in the third quarter compared to last year. The announcement came during a conference where Moynihan described a much quieter environment for the bank’s Wall Street advisory and trading operations, marking a sharp contrast to a stellar second quarter that saw investment banking fees soar by 50 percent.
Moynihan attributed the slump to broader market trends, noting that overall investment banking activity is down across the board according to Dealogic data. He admitted that his institution isn’t as well positioned in certain active sectors, leading them to expect a steeper decline than the general market average. This cautious outlook sent company shares sliding 5 percent in afternoon trading as investors reacted to the sudden cooling of momentum.
The dip has raised questions about whether the recent artificial intelligence fueled boom in trading and advisory services is starting to lose steam. While Moynihan mentioned that there is still a healthy pipeline of deals, particularly within middle market banking, the prospect of double digit declines suggests that the previous surge in capital markets activity may have been temporary.
Other major players offered slightly different perspectives later in the day. Citigroup CFO Gonzalo Luchetti provided a more optimistic forecast, suggesting their own investment banking revenue is tracking toward low single digit growth for the quarter. However, Luchetti emphasized that September remains a critical window, noting that these final few weeks can significantly shift total results before the books close.