BofA joins rivals in predicting stronger investment banking revenue

By Saeed Azhar

NEW YORK (Reuters) -Bank of America expects its investment banking revenue to rise by 10% to 15% in the first quarter from a year earlier, joining rivals who have recently turned more optimistic.

“We’ve had better capital markets activity, you can see that just in the deal flow,” BofA’s Chief Financial Officer Alastair Borthwick said at a financial conference on Wednesday.

Citigroup Jane Fraser told investors on Tuesday she expects investment banking fees to rise by a low-teens percentage in the first quarter versus the fourth quarter of 2023.

And JPMorgan Chase CFO Jeremy Barnum had earlier signalled fees would climb by a percentage in the low-to-mid teens this quarter versus a year earlier.

The BofA markets division is expected to have a robust performance fuelled by equities trading in the first quarter, Borthwick said. That will translate to flat revenue growth compared with a strong quarter a year earlier.

The S&P 500 index has gained 6.9% so far this quarter, led by technology stocks such as Nvidia Corp .

Citigroup expects its markets revenue to drop by 8% to 12% in the first quarter compared with a strong comparable quarter in 2023, while JPMorgan expects trading revenue to decline by 5% to 10% in the quarter compared to a strong quarter in the previous year.

Bank of America’s net interest income (NII) — the difference between what lenders earn on loans and pay on deposits — is expected to hit the upper range of the $13.9 billion to $14 billion forecast in the first quarter.

The lender’s NII decreased 5% to $13.9 billion in the fourth quarter as it paid more for customer deposits.

Profit at the second-largest U.S. bank shrank in the fourth quarter, hurt by $3.7 billion in one-off charges and a slide in interest income as it paid more to hold on to customer deposits.

(Reporting by Saeed Azhar, editing by Lananh Nguyen, William Maclean)