Bank of America Warns of Sharp Drop in Investment Banking Fees, Shares Fall

Bank of America said it expects its investment banking fees to fall more than 10% in the third quarter, according to CNBC. The forecast from the second-largest U.S. bank by assets sent its shares lower on Monday.

The muted outlook comes after a period of strong dealmaking activity that had been partly attributed to enthusiasm around artificial intelligence-related investments and corporate transactions, CNBC reported.

Analysts cited by CNBC said the projected decline could be an early indication that Wall Street’s AI-fueled boom in mergers, acquisitions and capital markets activity may be losing momentum.

Bank of America has not provided additional detail beyond the percentage guidance, and it was not immediately clear which specific business lines within investment banking were expected to see the steepest declines.

The bank’s stock reaction reflected investor concern that other major financial institutions could report similar softness in their investment banking segments when third-quarter results are released, according to CNBC.

Bank of America is scheduled to report its full third-quarter financial results in the coming weeks, which will provide further clarity on the drivers behind the anticipated fee decline.