Bank of America shares slide on weaker Wall Street fee outlook

Bank of America shares closed about 5% lower after chief executive Brian Moynihan forecast weaker third-quarter investment banking and trading revenue, weighing on financial stocks across Wall Street.

Moynihan said investment banking fees were on pace to reach US$1.6 billion to US$1.8 billion, down about 10% to 20% from the same quarter a year earlier. Dealogic data showed the broader investment banking market was down roughly 28% year on year, with about half a month remaining in the quarter.

Bank of America’s sales and trading revenue was expected to be flat. Moynihan said financing and prime brokerage activity that had supported results earlier in the year had cooled as investors pulled back on risk. The bank’s deal pipeline remained strong, he said, but transactions were taking time to complete.

The weaker outlook sent other major banks lower. Goldman Sachs fell about 4% and Morgan Stanley declined 3%, while JPMorgan Chase, Citigroup and Wells Fargo dropped between 1% and 2%.

Citigroup offered a stronger quarterly outlook at the same financial services conference. Chief financial officer Gonzalo Luchetti said market revenue was tracking towards mid-single-digit growth, supported by equities, financing and foreign exchange. Investment banking revenue was expected to rise by the low single digits, with potential upside from deals completed before quarter-end.

Moynihan said Bank of America’s loans and deposits were growing, while net interest income was tracking in line with expectations. The fee and revenue figures remain forecasts, and deal timing before the end of the quarter could alter the final results.