It was a tale of two third quarters for Bank of America’s trading operations, as strong equities results were partly offset by weakness in fixed income.
BoA’s Global Markets business generated $4.5 billion in Q3 revenue, up 3% from the year-earlier period, excluding debt valuation adjustment (DVA).
“Year-over-year, revenue was up 3%, driven by sales and trading,” BoA Chief Financial Officer Paul Donofrio said Oct. 14 on the earnings webcast. “Sales and trading contributed $3.6 billion to total revenue, improving 9% year-over-year. FICC declined 5%, while equities improved 33%, recording one of its strongest performances ever.”
“FICC results reflected a flat yield curve and range bound interest rates for much of the quarter with continued tight credit spreads,” Donofrio said.
BoA CEO Brian Moynihan cited equities trading as an area for potential market share gain. “We’ve expanded the balance sheet in the markets business, and we’re seeing the returns on that (being) stronger in the equities business.”
Moynihan said deploying balance sheet capital for trading can result in a sustained increase in trading activity.