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Bank of America Sees Investment Banking Fees Falling 10%: What It Means for U.S. Deal-Making
Bank of America expects its investment banking fees to fall by at least 10% in the third quarter of 2026, CEO Brian Moynihan told investors this week. That headline sounds like bad news for Wall Street. But sitting right next to it is a detail that complicates the story: Moynihan also says the bank's deal pipeline remains full. Understanding how both things can be true at once is the actual story here.
- Bank of America projects Q3 2026 investment banking fees of $1.6 billion to $1.8 billion, down from about $2.0 billion in Q3 2025
- CEO Brian Moynihan says the broader investment banking market is down roughly 10%, with BofA likely falling a bit more due to its business mix
- Sales and trading revenue is expected to be roughly flat versus $5.4 billion in Q3 2025 — a separate business from investment banking
- Q2 2026 investment banking fees actually rose 50% year-over-year to about $2.1 billion, making Q3's outlook a slowdown from an unusually strong quarter, not a collapse
- Bank of America shares fell more than 5% and the S&P 500 banking index dropped 2.7% the same day
- Moynihan says the deal pipeline is still full and describes the broader U.S. economy and consumer credit quality as solid
The Numbers Behind the Headline
Figures are based on Bank of America management commentary at the Barclays Global Financial Services Conference and company-reported results. Q3 figures are an outlook, not final reported results.
Wealth management figure and net-interest-income guidance context reported separately by CNBC and Yahoo Finance coverage of the same Sept. 14, 2026 remarks. See Sources & Methodology below.
What Bank of America Is Forecasting for Q3
Speaking Monday at the Barclays Global Financial Services Conference, Moynihan projected Bank of America's investment banking fees at $1.6 billion to $1.8 billion for the third quarter of 2026, down from roughly $2.0 billion in the same period last year. He attributed part of the decline to the bank's specific mix of business rather than a uniform industry collapse, noting BofA holds smaller positions in some of the segments that have seen the most activity recently. Shares of Bank of America fell more than 5% in the hours after his comments, while the broader S&P 500 banking index dropped 2.7% the same day.
Why Investment Banking Fees Matter
Investment banking fees come from a handful of related but distinct activities. M&A advisory is when a bank helps companies merge with or acquire one another. Debt underwriting is when a bank helps a company or government entity raise money by issuing bonds. Equity underwriting is when a bank helps a company raise capital by issuing stock. Corporate advisory covers broader financial guidance on transactions. These fees rise and fall with how much of this activity actually closes in a given quarter — not with how healthy the bank is overall.
Why Fees Are Expected to Fall
Moynihan pointed to broader softness across the investment banking industry, not a problem unique to Bank of America, citing Dealogic data showing the overall market down about 10%. He said BofA's own results would likely fall a bit further than that industry average because of where the bank is positioned within specific deal segments. That distinction matters because it separates a company-specific issue from a market-wide one — and the data suggests this is closer to the latter.
The Important Twist: The Deal Pipeline Is Still Strong
Despite the softer fee outlook, Moynihan said the bank's pipeline is staying full, and specifically pointed to strength in middle-market investment banking. This suggests the slowdown may reflect timing — deals that haven't closed yet — rather than a fundamental drop in corporate appetite for M&A, financing, or advisory work. A full pipeline does not guarantee fees materialize in any specific quarter; it only means the underlying demand for deals hasn't disappeared.
Investment Banking vs. Sales & Trading
Investment Banking
- M&A advisory
- Debt underwriting
- Equity underwriting
- Capital raising & corporate advisory
Sales & Trading
- Securities trading on behalf of clients
- Market-making activity
- Trading-related revenue
- Expected roughly flat vs. $5.4B in Q3 2025
These are two separate revenue lines inside the same bank, and they don't move together. A decline in investment banking fees says nothing directly about what's happening in trading, and vice versa — treating the two as one number misreads what's actually going on inside a diversified bank.
What a 10% Fee Decline Does — and Does Not — Mean
Level 1: Bank revenue from investment banking specifically can decline in a given quarter. Level 2: That does not automatically mean the bank is losing money overall — investment banking is one revenue line among several inside a large, diversified institution. Level 3: It does not automatically mean U.S. corporate deal-making has collapsed — a pipeline can remain full even while fewer fees get booked in a specific three-month window. The key question is not whether the number went down, but where activity is concentrated and how quickly the pipeline converts into closed, fee-generating deals.
Q2 Was Strong. Why Is Q3 Different?
The Q3 outlook looks more dramatic set against Q2 2026, when Bank of America's investment banking fees actually rose 50% year-over-year to roughly $2.1 billion, driven by strength in debt underwriting, advisory, and equity underwriting. Comparing the two quarters directly would be misleading — they measure different periods, and Q2's growth rate is not a forecast that was supposed to continue. What the comparison does show is a change in pace: an unusually strong first half giving way to a more typical, and by some measures softer, third quarter.
Q2 2026 (Actual) vs. Q3 2026 (Outlook)
Bars scaled to the reported and projected investment banking fee figures for each quarter.
Q3 bar reflects the midpoint of BofA's own $1.6B-$1.8B outlook range as a share of Q2's confirmed $2.1B actual result. Q3 figures are management guidance, not final reported results, and may change when Bank of America reports Q3 earnings around Oct. 14, 2026.
How Interest Rates Could Affect Deal-Making
Moynihan also flagged that higher interest rates could weigh on financing demand going forward, a separate factor from the current-quarter fee outlook. Higher rates raise the cost of debt-financed acquisitions and can slow the pace at which companies choose to issue new bonds, which would show up in the debt underwriting side of investment banking specifically rather than across the whole business. This is a forward-looking risk factor Moynihan raised, not a claim that it has already reduced Q3 activity.
What This Says About the U.S. Capital Markets
Moynihan struck a notably calmer tone about the underlying business than the stock reaction might suggest, saying consumers are still spending and describing credit quality as strong. Net interest income growth is reportedly tracking the top end of the bank's 6%-8% guidance range for 2026, and wealth management fees from Merrill and private banking are up 10% to 15% in the quarter — both signs of strength sitting alongside the softer capital-markets number. The picture that emerges is less "investment banking is struggling" and more "one specific revenue line is normalizing after an exceptional first half, while other parts of the bank continue performing well."
The Deal-Making Pressure Test
Select a market condition to see, in general educational terms, how it tends to affect different parts of investment banking. This does not predict Bank of America's results and is not investment advice.
Educational framework based on the general mechanics investment banks describe, not a Bank of America forecast, stock recommendation, or prediction of specific results.
The Big Takeaway
The important signal here isn't simply that Bank of America expects investment banking fees to fall. It's the combination of a softer fee outlook with a still-strong deal pipeline. That pairing suggests the market may be normalizing unevenly, quarter to quarter and segment to segment, rather than shutting down. Where deal activity concentrates, what type of transactions actually close, and how financing conditions evolve will matter more than the single 10% headline number.
What Investors and Consumers Should — and Should Not — Infer
This is not a recommendation to buy, sell, or hold Bank of America stock, and nothing here should be read as investment advice. What the data supports is a narrower, more useful conclusion: one bank's investment banking fees are normalizing after an unusually strong first half, sales and trading is holding steady, and management describes the broader U.S. economy and credit conditions as solid. Extending that into a story about a "banking crisis" or a stock call goes well beyond what Moynihan's comments actually said.
- Check whether a figure is a management outlook or a final reported result
- Separate investment banking fees from sales & trading revenue — they're different businesses
- Compare the current quarter to a full year of context, not just one prior quarter
- Look for whether the company describes the underlying economy and credit quality separately from the specific line item
Related Regulatory and Market Context
This fee normalization sits alongside other recent U.S. banking developments, including the broader strength shown in U.S. bank profits in Q2, and it comes as rising bond yields continue to shape financing costs across the industry. It's also worth noting this is one piece of a wider pattern of change across the broader U.S. banking sector this year.
Frequently Asked Questions
Why is Bank of America expecting investment banking fees to fall in Q3 2026?
CEO Brian Moynihan said the broader investment banking market is down roughly 10%, and that Bank of America's specific business mix means its own decline will likely be somewhat steeper than that industry average.
How much could Bank of America make in investment banking fees in Q3 2026?
Moynihan projected $1.6 billion to $1.8 billion, down from approximately $2.0 billion in the third quarter of 2025.
What were Bank of America's investment banking fees in Q2 2026?
Approximately $2.1 billion, a 50% increase year-over-year, driven by strength in debt underwriting, advisory, and equity underwriting.
Does a 10% decline mean Bank of America is in financial trouble?
No. Investment banking fees are one revenue line within a large, diversified bank. Moynihan described the underlying U.S. economy and consumer credit quality as strong, and other business lines, including wealth management, are reportedly performing well in the same quarter.
What are investment banking fees?
Revenue banks earn from services like M&A advisory, debt underwriting, equity underwriting, and corporate advisory — distinct from trading-related revenue.
How do higher interest rates affect investment banking?
Higher rates can raise the cost of debt-financed acquisitions and slow the pace of new bond issuance, which primarily affects the debt underwriting side of investment banking.
Does a strong deal pipeline mean investment banking revenue will automatically increase?
Not automatically. A full pipeline reflects demand for future deals, but fees are only recognized once transactions actually close, which can happen on a different timeline than the pipeline's overall size suggests.
What is the difference between investment banking and sales and trading?
Investment banking covers advisory, M&A, and underwriting activity. Sales and trading covers securities trading and market-making on behalf of clients. They are separate revenue lines that don't necessarily move together.
Can You Read Past the Fee-Drop Headline?
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Visual Illustration: Understanding the Fee-Drop Paradox
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Illustrative graphic created for Smart Travel Finance. Not affiliated with Bank of America Corporation.