BAC Warns of Q3 Capital Markets Weakness: Will Fee Income Take a Hit?

Bank of America projects Q3 investment banking fees between $1.6 billion and $1.8 billion, marking a roughly 15% year-over-year decline, while trading revenues are expected to remain flat. The guidance signals weaker capital markets activity heading into earnings season.

Wealth management is positioned to cushion the blow. BAC forecasts assets under management fees will climb 10% to 15%, providing a partial offset to the investment banking slowdown. CEO Brian Moynihan characterized the deal pipeline as "very strong," framing the third-quarter weakness as a timing issue rather than a structural deterioration in demand.

The split between investment banking and wealth management performance illustrates the divergence in BAC's fee streams. Trading desks are holding ground but not gaining, while advisory and underwriting businesses face near-term headwinds. The wealth unit's double-digit percentage growth becomes increasingly critical as deal flow lags.

Moynihan's pipeline commentary suggests potential upside for Q4 and 2025, but traders will focus on whether actual deal closures materialize or if macro uncertainty continues to delay transactions.