Highlights

Bank of America expects a noticeably quieter third quarter for its advisory and trading operations following a blockbuster Q2. CEO Brian Moynihan said investment banking fees will probably decline by more than 10% year-over-year, while trading revenue is expected to be roughly flat. This projected drop contrasts sharply with Q2's strong gains, when investment banking fees rose about 50% and trading revenue jumped roughly 33%.

Sentiment Analysis

• The tone of the report is cautiously pessimistic: it signals a pullback after an unusually strong quarter. The market reaction—shares falling—reflects investor concern about sustainability. Use the progress bar below to show this sentiment as mixed-to-negative.

Article Text

Bank of America is preparing for a calmer third quarter for its Wall Street advisory and trading businesses after reporting exceptionally strong results in the second quarter. CEO Brian Moynihan told analysts that investment banking fees are likely to fall by more than 10% compared with the same period last year, while trading revenue is expected to hold roughly steady. Those projections follow a Q2 performance that benefited from a surge in capital markets activity, with investment banking fees up about 50% and trading revenue rising roughly 33%.

Moynihan referenced Dealogic data indicating that investment banking activity across the market is down about 10%. He noted that Bank of America is not as exposed to some of the pockets of higher activity, which could leave the bank experiencing a slightly larger decline than the market average. The CEO also pointed to a healthy pipeline of deals, particularly in the middle-market segment, suggesting that underlying demand remains, even if volume has moderated.

The announcement had an immediate market impact: Bank of America shares fell roughly 5% in afternoon trading following the remarks. That decline underscores investor sensitivity to quarterly guidance and raises questions about whether the recent uptick in advisory and trading revenue—partly linked to AI-driven interest and broader capital markets momentum—will be sustained.

At the same time, other major banks are reporting mixed trajectories. Citigroup’s CFO Gonzalo Luchetti told analysts that Citigroup expects investment banking revenues to grow in the low single digits in the third quarter, with trading revenue tracking toward mid-single-digit growth. Luchetti emphasized that outcomes could improve if activity picks up late in the quarter, noting that September is often decisive for quarterly results.

In context, the industry appears to be moving from a period of unusually strong deal flow and trading gains toward a more normalized pace. Regulators, banks and investors will be watching upcoming weeks closely; late-quarter deal closings and market volatility can materially alter final outcomes. The key point is that a strong Q2 does not guarantee similar performance in Q3, and banks’ exposure to specific client segments will influence how sharply they feel the slowdown.

Overall, Bank of America’s forecast signals a temporary cooling rather than a systemic problem for the industry. A modest pullback in fees and flat trading revenue would represent a reversion toward longer-term averages after an outsized quarter. However, investors will be alert for signs that the recent boom in advisory and trading activity, fueled by thematic interest and macro drivers, may not be durable without renewed deal flow or market momentum.

Key Insights Table