Bank of America CEO Brian Moynihan Talks Trading Revenue, AI Safety

Brian Moynihan (0:02)

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Dani Burger (0:07)

I am here with Brian Moynihan. Brian, thank you so much for joining. Great to see you today.

Brian Moynihan (0:11)

It's great to see you again, Dani.

Dani Burger (0:12)

And I want to start just because you did make a little bit of news just moments ago speaking at this conference, saying that you expect trading to be flat for this current quarter. And I wonder just what has changed in the environment? Because we obviously saw just such a big second quarter in this high water mark. What has sort of changed in the overall trading landscape?

Brian Moynihan (0:30)

So I think just to keep a perspective, if we end up with a quarter of what we just said flat, it'll be one of the best third quarters that we've ever had in the trading history of the company. So but what happened is it changed. So last year's second quarter was Liberation Day 25 This year's second quarter compared that was up a lot in trading and investment banking, things like that. Last year's third quarter was a recovery quarter from Liberation Day quarter and the tariffs coming in. I know it's hard to remember that far away, but all of us are running around saying, oh my gosh, the economy is going to stop cold. Third quarter, oh, it got understandable, easier.

Everything kicked back in. So now you're comparing that quarter with this year's third quarter. This year, then the AI trade came in and if you guys report about Korea and the leverage and all that stuff, and a lot of it's come out of the system because people brought the risk down. And when you put that together, it's just a sheer volume of activities. Now equities is up more and fixed income is bouncing around a little bit down and that ends up to flattish. But the team and Dennis and Sufi and Jimmy's leadership, the team is doing a great job. It's just sometimes the market quits doing things and that's one of these times. Now, the pipeline investment banking is full. The activity level is strong, but with rates moving up 100 basis points over a short period of time, people pause a little bit and leverage coming out of the system for a while.

Dani Burger (1:47)

I think that that pause in a more, again, relatively flat environment extends through the end of the year as well into Q4.

Brian Moynihan (1:53)

I think as soon as we get some stability around the rate structure, I mean, we got the Fed meeting this week, and sort of what people get a common view of that, then the rates will settle at some point. I think that will help some of the trading activity. We've got a lot of pipeline IPOs, secondary offerings, things coming on that we know will go through. But on the debt financing side, which is a big part of the activity, the issue is that you got to have a rate structure that's not bouncing around, so people can feel comfortable. They can commit the issue into an issue a week later, a few days later. So it's good. But the Yemeni activity is strong. The conversation is strong. We're, you know, flattish. You know, it's five billion plus of revenue. It's good. Now, the West Malaysia revenue will be up 10 to 15%.

So you're trying to say to people, you know, we're 60% core debt interest income. That's fine. It's doing everything we thought we'd do. We are managing expenses well. The credit quality of the firm's good. Consumers are spending. It's just that the trading activity was such explosive in the second quarter. Of course, when it mitigates, it feels a little bit strange. But then I'll get back and grow from here.

Dani Burger (2:52)

It's maybe a good problem to have, Brian, when you set the high water mark that high that you can't get back there. So fair to say ramps back up fourth quarter.

Brian Moynihan (2:58)

That's kind of what we expected. The activity will settle in and you got the summers of summer and we lose a lot of activity in August anyway. But and that's not true. It's always traditional second to third quarter comes down.

It's a comparison last year that's kind of got.

Dani Burger (3:12)

So part of what we saw in the second quarter of this trading blow, but a lot was around the AI trade and situational awareness. And I wonder how you've rethought things. Obviously Bank of America acting as a prime brokerage for situational awareness. Have any has anything changed post that whole blow up?