Bank of America misses profit estimates on capital market weakness; books US$1.2 billion charge

BANK of America missed third-quarter profit estimates on Wednesday (Oct 14) due to weakness in its capital markets business and disclosed a US$1.2 billion charge tied to a regulatory penalty over failures to detect potential money-laundering activity.

Shares of the second-biggest US lender fell 4.2 per cent in premarket trading, adding to the stock’s 1.9 per cent decline this year.

Capital markets momentum has slowed down after a strong first half of the year amid a prolonged bond market selloff, which has driven yields around the world to multi-decade ​highs.

BofA’s sales and trading revenue fell 5 per cent to US$5.1 billion in the quarter, dragged down by weakness in fixed income, currencies and commodities. The bank had last month projected quarterly sales and trading revenue to be relatively flat compared to last year.

Meanwhile, BofA’s investment banking fees fell 11 per cent to US$1.8 billion in the reported quarter. The bank had last month projected a decline of at least 10 per cent, as it wasn’t well positioned in some businesses that saw more activity.

BofA slipped to fourth place in the global investment banking league table for the first nine months of 2026, from third a year earlier, Dealogic data showed.

Investment banking fees can be lumpy from quarter-to-quarter and are influenced by when deals close. Transaction timing can often move around due to market conditions and regulatory approvals.

The Charlotte, North Carolina-based bank reported a profit of US$6.9 billion, or 91 cents per share, for the three months ended Sep 30, compared with US$8.3 billion, or US$1.04 per share, a year earlier.

Excluding the US$1.2 billion regulatory settlement charge, BofA earned US$1.08 per share, missing estimates of US$1.10 per share, according to estimates compiled by LSEG.

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Regulatory settlement charge

The fine, unveiled late on Tuesday, stems from BofA’s failure to report over US$5 billion in suspicious activity to the US government.

The actions, which include the third-largest penalty in US Treasury history, highlight growing regulatory scrutiny of shortcomings in tackling money ​laundering at US financial giants.

Regulators have placed BofA under a consent order — a major regulatory punishment — that requires the bank to work with a third party to identify and report suspicious transactions that went undetected.

Wall Street analysts said the penalty would likely add to negative sentiment and raise concerns about expenses and the duration of the order.

The penalty follows a 2024 consent order from the Office of the Comptroller of the Currency, which had required BofA to address shortcomings in its ability to police money laundering.

Since late 2023, BofA has been working with US regulators to overhaul its safeguards against money laundering and other illegal transactions. REUTERS