Finance

Bank of America’s dealmakers rake in record fees as M&A surges

Bank of America dealmakers continued a scorching quarter for Wall Street bankers, posting record M&A revenue and a 23% increase in investment banking fees.

The US bank followed rival JPMorgan with all-time high M&A fees as activity surged to over $4trn in deals in the first nine months of 2021. It pulled in $2.2bn in investment banking fees, narrowly missing an record set during the first three months of this year.

Bank of America’s M&A fees were $654m during the third quarter, up by 65% on the same period last year and well ahead of the $414m predicted by analysts. JPMorgan dealmakers hauled in $1.2bn over the same period, an increase of 187% and a record for the Wall Street bank.

Net profits were $7.7bn, well ahead of analyst expectations and flattered by a net reserve release of $1.1bn. Revenues of $22.8bn were also ahead of the $21.7bn the market expected.

“We reported strong results as the economy continued to improve and our businesses regained the organic customer growth momentum we saw before the pandemic,” said chairman and chief executive Brian Moynihan in a statement.

Record fees are helping bolster overall revenues at large Wall Street banks. But as the trading boom of 2020 has faded, costs have increased and loan growth remains muted.

Investment banks brought in over $93bn during the first nine months of 2021, according to data provider Dealogic. Bank of America ranks fourth in the investment banking league tables, down from third at the same point in 2020, bringing in $6.3bn — a 30% increase on the same period last year.

READ JPMorgan hires Bank of America’s Hiseman to lead European corporate bank

M&A activity surged over $4trn so far in 2021, with record revenues across the sector and Wall Street banks taking a larger share. Banks have made $29.9bn in M&A fees — an all time high at this point in the year. Bank of America has a long-standing ambition to be third in the league tables across all sectors and geographies in which it operates.

Bank of America’s global markets and investment banking units are in the midst of a senior management overhaul, with long-serving boss Tom Montag set to retire at the end of the year. His responsibilities have been split between Matthew Koder, who heads up its corporate and investment banking business, and Jim DeMare, who leads global markets.

READ Bank of America unveils sweeping leadership changes with new CFO

The trading divisions of investment banks, which helped support weaker consumer and commercial units weighed down by loan loss provisions at the height of the pandemic, have slowed. Bank of America’s fixed income division fell by 5% to $2bn during the third quarter, smaller than the 20% drop at rival JPMorgan.

Stock trading divisions of large Wall Street banks have surged during the third quarter, with Bank of America’s 33% gain in the unit — to $1.6bn — following a 30% increase at JPMorgan.

To contact the author of this story with feedback or news, email Paul Clarke

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