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BofA's (BAC) Investment Banking Fees Trending Up In Q3

It seems investment banking income is on a rebound after a challenging 2015 and first half of 2016. Bank of America CorporationBAC is witnessing an uptick in investment banking fees in third-quarter 2016. This was disclosed by Christian Meissner, head of global corporate and investment-banking business at BofA.

After a sluggish investment banking performance over the last few quarters, this shows an accelerating pace of deals over the quarter. Recovering oil prices and stabilizing market conditions are the primary reasons for the reversal in the investment banking scenario. Notably, in the first half of 2016, BofA's investment banking fees declined nearly 12% year over year to $1.44 billion.

"…the third quarter again is proving to be a better quarter from a revenue and activity perspective than the second quarter has been", Meissner said at an investor conference in New York sponsored by Barclays PLC BCS . "So, from that perspective, a clearly difficult environment in aggregate, but I would say, a very tough start at the beginning of the year with significant improvement since then."

Elaborating further, Meissner pointed out that despite the improvement in investment banking fees, only investment grade bond market seems to be continuing "its very strong and very steady performance over the last number of years."

Among other major investment banking fee pools, the pace of M&A business "has picked up steam recently". Further, the equity underwriting business "continues to be very, very sluggish notwithstanding the fact that post Labor Day, we have seen a number of launches across the business."

Additionally, Meissner stated, "…I will tell you is that whereas our M&A business is tracking roughly in line with the market, while the capital markets, all the underwriting businesses are doing substantially better than the aggregate sequel. So, we feel like we are gaining share, we are making progress."

Overall, this depicts optimism for the banking sector, which has been reeling under a challenging operating environment, stringent regulations, falling liquidity and higher level of capital requirement against risky assets. All these had significantly lowered market revenues and hurt banks' top line.

Currently, BofA carries a Zacks Rank #3 (Hold).

A couple of better-ranked banking stocks include Comerica Incorporated CMA and Hancock Holding Company HBHC , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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