April 25, 2024

Bank of America sees M&A fees slide again as debt deals prop up investment bank

Bank of America has kicked off a closely-watched earnings season for Wall Street’s biggest banks with an overall uptick in investment banking fees.

Total investment banking fees at the lender rose 7% to $1.1bn in the final quarter of 2023 compared to the same period last year, holding third place in the league tables.

However, the outlook for M&A remained challenged; fees from equity deals slipped from $232m in the third quarter of 2023 to $199m in the fourth. The investment bank was propped up by debt capital market fees, which rose 3% to $589m as advisory fees also slipped 13% to $389m.

Chief executive Brian Moynihan said at a December conference that Bank of America was set to bring in $1bn in investment banking fees in the fourth quarter, which would be down by single digits compared with a year earlier as listings and mergers continue to be few and far between amid a challenged macroeconomic environment.

Global banking revenue came in at $5.9bn, just shy of analysts’ expectations of $6bn. Analysts had expected an even sharper drop in advisory work to $347m, as well as equity deal fees falling to $170m.

Total investment banking fees across the market continued to fall last year, slipping by 15% to $67.1bn, according to data provider Dealogic. Bank of America maintained its third position in the revenue league tables, bringing in 6.1% of the total market.

While the bank has yet to follow Wall Street rivals with significant layoffs, Bank of America’s headcount dropped to 212,985 at the end of 2023, from 216,823 at the end of 2022.

In the fourth quarter results Bank of America said a drop in expenses of $210m was “driven primarily by lower average headcount and lower revenue-related expenses”.

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It has continued to invest in key areas, with 1,500 staff within its corporate and investment bank added over five years, Moynihan said in December. The bank has not had to “lay off a lot of people”, and employee numbers have slipped by “managing headcount”.

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