Bank of America anticipates a decline in its third-quarter investment banking fees by over 10% compared to the same period last year, according to CEO Brian Moynihan. This signals a slowdown following a strong second quarter when the bank reported a 50% increase in investment banking fees and a 33% rise in trading revenue. Moynihan highlighted that while the overall market for investment banking is down about 10%, Bank of America expects to underperform that average due to its less favorable positioning in some segments.

The bank’s outlook of flat trading revenue for the quarter contrasts with the previous period’s substantial growth, suggesting a more cautious environment on Wall Street. Investors responded negatively to these projections, with Bank of America shares dropping 5% in afternoon trading after the announcement. Moynihan also noted a healthy deal pipeline, especially in middle-market investment banking, but warned that the overall investment banking environment may remain challenging.

This subdued guidance arrives amid broader industry concerns about the sustainability of recent gains driven by AI innovation in advisory and trading services. Wall Street has experienced surges in capital markets activity fueled by artificial intelligence, but Bank of America’s results may indicate that this momentum is encountering headwinds. The cautious tone from the nation’s second-largest bank by assets raises questions about whether the heightened market activity will continue.

Following Bank of America’s update, Citigroup offered a slightly more optimistic view, forecasting low-single-digit growth in investment banking revenue and mid-single-digit growth in trading for the third quarter. However, Citigroup’s CFO Gonzalo Luchetti emphasized that the final weeks of September will be crucial to the quarter's results, suggesting potential volatility and the need for strong execution to maintain momentum.