Bank of America Chief Executive Brian Moynihan told analysts on Monday that the bank's Wall Street advisory and trading operations will turn significantly quieter in the coming months following an impressive second-quarter performance.
Speaking at a conference, Moynihan indicated that third-quarter investment banking fees could fall by more than 10% compared with the same period last year, while trading revenue is expected to remain largely flat. This stands in sharp contrast to the second quarter, when the bank's investment banking fees surged 50% and trading revenue jumped 33%."We are seeing the overall investment banking market down 10%. We are not as well-positioned in some of the more active areas of the business, so our decline could be slightly larger than that," Moynihan said.
Shares of Bank of America closed 5% lower on Monday in response to Moynihan's downbeat outlook. As the second-largest U.S. bank by assets, this gloomy forecast could serve as an early signal that the artificial intelligence-driven advisory and trading boom on Wall Street may have hit a rough patch.
Although Moynihan noted the bank holds a substantial deal pipeline, particularly in middle-market investment banking, the expected double-digit decline in investment banking activity may prompt investors to question whether the recent surge in capital markets activity was merely a flash in the pan.
Later on Monday, Citigroup Chief Financial Officer Gonzalo Luchetti told analysts that the bank's third-quarter investment banking revenue is on track for "low single-digit" growth, while trading is expected to deliver "mid-single-digit" revenue growth. He added that these figures could climb further if the bank's bankers and traders deliver a strong finish to the quarter.
"September is the critical month. These next few weeks are very important," Luchetti said.
The investment banking fee decline mentioned in this article, combined with Apple's AI product launch from our previous discussion, highlights the contrasting market reactions to AI-related themes. Would you like me to provide a comparative summary of the core viewpoints from both articles?