Bank of America has missed third-quarter profit estimates due to weakness in its capital markets business and disclosed a $1.2 billion charge tied to a regulatory penalty over failures to detect potential money-laundering activity.
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.
Bank of America’s sales and trading revenue fell 5% to $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, its investment banking fees fell 11% to $1.8 billion in the reported quarter. The bank had last month projected a decline of at least 10%, as it was not well positioned in some businesses that saw more activity.
Bank of America 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 $6.9 billion, or 91 cents per share, for the three months ended September 30, compared with $8.3 billion, or $1.04 per share, a year earlier.
Excluding the $1.2 billion regulatory settlement charge, Bank of America earned $1.08 per share, missing estimates of $1.10 per share, according to estimates compiled by LSEG.
The fine, unveiled last night, stems from Bank of America’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 Bank of America 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 Bank of America to address shortcomings in its ability to police money laundering.
Since late 2023, Bank of America has been working with US regulators to overhaul its safeguards against money laundering and other illegal transactions.
