BofA misses profit estimates on trading weakness; books $1.2 billion charge

Bank of America missed third-quarter profit estimates on Wednesday due to weakness in its trading business and disclosed a $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 6.3% ‌in premarket trading, adding to the stock's 1.9% decline this year. The Wall Street giant posted weaker fixed income, currency and commodities revenue, mirroring third-quarter trends at rivals JPMorgan Chase, Wells Fargo and Goldman Sachs.

BofA's sales and trading revenue fell 5% to $5.1 billion in the quarter, as weakness in FICCovershadowed record quarterly equities trading. The bank had last month projected quarterly sales and ‌trading revenue to be relatively flat compared to last year. FICC trading slipped 17% in the quarter, driven mainly by weakness in mortgages, municipals and credit.

"The poor capital ‌markets performance doubles the negative impact of the earnings miss," Zacks Investment Management Chief Market Strategist Brian Mulberry said. In a bright spot, net interest income (NII) — the difference between what a bank earns on loans and pays out on deposits — jumped 8% in the quarter, driven by higher loan and deposit balances and fixed-rate asset repricing.

REGULATORY SETTLEMENT CHARGE The fine, unveiled late Tuesday, stems from BofA's failure to report over $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.

BofA had been working with regulators for some time to reach the resolutions, Chief Financial Officer Alastair Borthwick told reporters ​on a call, adding the bank had added thousands of people to shore up its efforts to tackle money laundering. 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.

INVESTMENT BANKING WEAKNESS BofA's investment banking fees fell 11% to $1.8 billion in the quarter. The bank had last month projected a decline of at least 10%, as it wasn't well ⁠positioned in some businesses that saw more activity.

"The environment for deal making remains solid. It's a pretty active environment," Borthwick said, adding that BofA's investment banking pipelines are strong. 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.

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