(Bloomberg) -- Bank of America Corp.’s quarterly results for investment banking will come in lower than some on Wall Street expected, while the sales and trading business is on track to increase by low single digits, according to Chief Executive Officer Brian Moynihan.
Investment banking revenue will be about $1.2 billion for the third quarter, flat with the same period a year ago, Moynihan said Tuesday at the Barclays Global Financial Services Conference. Some analysts had expected results closer to $1.5 billion from the second-largest US bank, or a rise of about 16.5%. “The mix of transactions is not as favorable to us, so we’ll be fine, but it’s going to fall off this quarter,” Moynihan said.
In contrast, sales and trading “will be up low-single-digits” and flat compared to the prior quarter, Moynihan said. “That’s a very strong performance, strongly reflecting investments we made a few years ago in capabilities across fixed income, and building back the equities business,” he said.
Shares of the Charlotte, North Carolina-based bank dropped 0.53% to $39.27 at 2:25 p.m. in New York.
Other guidance from Moynihan covered middle-market investment banking, which he said is still growing and now makes up about a third of investment banking revenue.
Overall loan demand is “okay,” with balances up about 0.75%, though some businesses are tending to draw less because of high interest rates, he said. Deposits have remained stable, he added.
Earlier this week, rival Goldman Sachs Group Inc. signaled its trading unit is on course to drop 10% from the prior year, led by declines in the fixed-income business. JPMorgan Chase & Co. said on Tuesday that its trading revenue could rise 2% from a year earlier, and that investment banking fees could jump 15% during the third quarter.
Citigroup Inc. said its net credit losses have climbed in its large cards business, as US consumers shift spending to basic needs and away from purchases that aren’t vital. Investors are closely watching consumer spending behavior as a factor in predicting how the Federal Reserve will decide to cut interest rates.
Moynihan, 64, is one of the longest-serving banking chiefs among the largest US lenders, and has signaled his intent of staying on for years to come. He was promoted to CEO in 2010 as the bank was coming out of the global financial crisis, and later steered BofA through the pandemic and last year’s turmoil in the banking industry.
Asked about Warren Buffett’s motive for selling BofA stock from Berkshire Hathaway Inc.’s portfolio in recent weeks, Moynihan said he can’t simply call up the billionaire investor.
“I don’t know what exactly he is doing because frankly we can’t ask and we wouldn’t ask,” Moynihan said, noting that Berkshire’s holdings are still sizable.
“The market is absorbing the stock. It’s a portion of the volume every day. And life will go on. But he has been a great investor for our company, and stabilized our company when we needed it,” Moynihan said.
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