Moynihan Sees BofA Trading Revenue Rising by ‘Single Digits’

  • CEO Moynihan says BofA’s trading in April and May ‘was solid’
  • Investment banking will ‘take longer to recover,’ CEO says

Bank of America Corp.’s second-quarter trading revenue is on track to rise by “mid-single digits,” Chief Executive Officer Brian Moynihan said Thursday, following optimistic comments a day earlier from JPMorgan Chase & Co.

“We feel good about it,” Moynihan, 56, said at an investor conference in New York. Trading in April and May was “consistent with what you’re hearing out there. We feel that for the quarter, we might be mid-single digits up over the last year.”

JPMorgan’s Daniel Pinto, who runs that firm’s investment bank, said Wednesday that trading revenue is poised to increase by a “mid-teens" percentage in the second quarter from a year earlier. A rebound in businesses including rates trading and some emerging markets are driving the improvement, he said.

Wall Street banks have been chopping costs and cutting jobs in debt-trading operations as stricter regulations and persistently low interest rates have strangled revenue. The world’s biggest investment banks generated $70 billion in fixed-income revenue last year, half the 2009 peak, according to Coalition Development Ltd.

Bank of America shares slid 4 cents to $14.82 at 10:04 a.m. in New York. The stock has dropped 12 percent this year, the worst performance in the 24-company KBW Bank Index.

‘Good Position’

JPMorgan and Goldman Sachs Group Inc. have differed from Morgan Stanley on whether revenues from trading bonds, currencies and commodities are permanently dwindling. The two larger banks have been preaching patience and even pointing to opportunities to steal market share from competitors, while Morgan Stanley cut a quarter of its fixed-income staff late last year.

“It feels that probably we are getting toward the end of the cycle of contraction now,” Pinto, 53, said Wednesday. “We are in a good position to face the next stage, when that comes.”

Goldman Sachs President Gary Cohn said Tuesday that he’s optimistic about fixed income as some European and U.S. competitors retrench, adding that trading revenue in those regions could rebound. The New York-based firm has cut the number of fixed-income employees by 10 percent since the beginning of 2012, while compensation for the business has declined more than 20 percent, Cohn said.

Investment Banking

While trading has improved in the second quarter, investment banking “is going to take longer to recover,” Moynihan told investors. The unit’s performance “is going to be dependent upon what’s going on out there,” he said. “It took a little while for the pipeline to pick up.”

At a separate event Wednesday, Moynihan played down the effect Donald Trump, the presumptive Republican presidential nominee, would have on the Charlotte, North Carolina-based bank if elected. Moynihan told investor Wilbur Ross, who posed the question during a 20-minute interview on stage, that he resists offering opinions on individual candidates.

“I have high confidence that the powers of the office will tend to shape people into being what’s good for America,” Moynihan said at the fundraiser for the Japan Society in New York. “At the end of the day, Bank of America will be fine.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE