Bank of America Falls About 5% After Moynihan Flags Weaker Investment Banking Fees

BAC closed at $59.47 on September 14, down 5.14% on volume of 60.8 million shares, about 86% above its three-month average, after chief executive Brian Moynihan used an appearance at the Barclays Global Financial Services Conference to walk analysts off their third-quarter investment banking expectations. Moynihan said fees are tracking to a range of $1.6 billion to $1.8 billion for the quarter, against roughly $2 billion in the same quarter a year ago, a decline of about 10% to 20%, according to Yahoo Finance's account of his remarks.

Moynihan framed part of the shortfall as an industry problem and part of it as a Bank of America problem. The broader investment banking market is on pace to be down roughly 10% according to Dealogic data, and he added that the bank expects to do somewhat worse than that: "We're not as well-positioned in some of the businesses that have more activity." He also pointed to timing rather than lost demand, saying "part of it is just getting the deals through the system" while describing the pipeline itself as strong, and guided sales and trading revenue to roughly flat year over year.

The read-across hit the rest of the group. GS and MS fell about 4% and 3% respectively, while JPM, C and WFC each gave up 1% to 2%. That was a company-specific move rather than a market-wide one: the S&P 500 closed at 7,620, down 0.48%, and the Nasdaq Composite at 26,186, down 0.56%, per The Motley Fool's session wrap. The sector read is not unanimous either. Citigroup finance chief Gonzalo Luchetti spoke at the same conference and was more upbeat, saying markets revenue was tracking to mid-single-digit growth.

What the guidance covers, and what it leaves alone, matters for how the stock is priced from here. The warning is confined to capital markets: consumer banking was described as steady, and flat trading revenue is a very different signal from a credit or deposit problem. The things to watch are whether the delayed deals Moynihan described actually close in the fourth quarter, whether peers confirm or contradict the roughly 10% industry decline when they report, and whether fee weakness begins showing up in the lines that have so far been insulated.

One note on the numbers circulating with this story: several aggregators reported a 6% decline. That figure was an intraday low. The closing move reported by independent outlets lands between 5.1% and 5.6%.