Bank of America follows Wall Street rivals with sharp trading decline as Covid boom fades

Bank of America’s trading revenues slipped by nearly 20% in the second quarter as the boom that has supported banks throughout the pandemic has faded, but investment banking fees remain at record levels.

The US bank followed rivals Goldman Sachs and JPMorgan with sharp drops in markets revenues in the second quarter, as fixed income trading slid by 38% to $2bn during the period.

Overall net profits at the bank were $9.2bn, well ahead of analyst expectations and up from $3.5bn at the same period last year. It gained $1.6bn as Covid-19 related credit provisions for bad loans were reversed. Revenues of $21.8bn were largely in line with consensus.

Brian Moynihan, Bank of America’s chairman and chief executive, described the results as “solid”. He added in a statement that it was bringing more staff back to the office after a sustained period of working from home during the pandemic. “More than 85% of our buildings and offices are open, and we’re welcoming our teammates back,” he said.

The trading bonanza that supported profits during the pandemic as banks put aside billions for potential loan losses has waned. Bank of America’s 19% decline in trading revenues to $3.6bn was largely down to fixed income. The unit also tumbled at rivals Goldman Sachs revenues, where fell by 45%, and JPMorgan, which booked a 44% decline.

READ JPMorgan’s investment bank slips by 19% as trading boom wanes

Bank of America brought in $2.1bn in investment banking fees during the quarter, maintaining near record levels as dealmaking has continued at breakneck speed this year. However, revenues were largely flat on the same period last year, compared to sharp gains at rivals Goldman Sachs and JPMorgan.

JPMorgan’s investment banking fees hit new highs of $3.6bn, while Goldman’s second quarter revenues of $3.6bn in the unit were second only to the first three months of this year.

Bank of America was fourth in the investment banking fee league tables in the first half of 2021, bringing in $3.6bn, according to data provider Dealogic, down from third at the same point in 2020.

While the record trading revenues during the height of the Covid-19 pandemic have faded, banks’ dealmakers have come to the fore. M&A, in particular has become a bright spot, with Bank of America’s rivals Goldman Sachs and JPMorgan seeing 82% and 53% increases respectively. Bank of America’s $407m in M&A fees was largely in line with the second quarter last year, and below the $462m analysts were expecting.

READ Goldman Sachs hikes pay by almost 50% in record first half for bankers

Investment banks earned $15.5bn in fees from M&A, a record start to the year, according to Dealogic, while a surge in initial public offerings has helped offset a cooling of the market in blank cheque companies in their equity capital markets units, which helped bolster revenues in the first quarter. The $60.3bn worth of fees earned in the first six months of 2021 is the best ever, according to the data provider.

To contact the author of this story with feedback or news, email Paul Clarke

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