Bank of America's profits from corporate and investment banking climbed just $11 million in the second quarter, despite near-record revenues from many of its businesses, as provisions and compensation expenses rose.
The virtually-flat result came in spite of a 39 percent increase in trading, capital markets and advisory revenues. Investment banking revenues climbed 16 percent, to $5.72 billion, compared with the second quarter last year. Trading, capital markets and advisory revenues were $2.12 billion, narrowly below record the first quarter's record of $2.2 billion.
Investment banking fees hit a record $645 million, which the bank attributed to a partnership between commercial and investment banking put in place last July. The bank said the partnership continues "to increase capital raising and M&A business among commercial clients."
Bank of America said the business benefited from "positive sales and trading results in liquid products, credit products and structured products as previous investments in personnel and trading infrastructure came to fruition."
However, it said "net income was impacted by increased provision expense primarily in business lending and increased performance-based compensation in capital markets and advisory services."
The bank said loan growth helped to offset the effects of a flattening yield curve.
Bank of America has seen a number of high level hires and departures in its investment banking business this year.
In April, Jonathan Moulds, head of global markets for Europe, the Middle East, Africa and Asia, replaced William Fall as president of the bank's entire business in the region. Moulds became head of global markets outside the U.S. last July.
In June, Bank of America lost its second head of European investment banking in a month when Alberto Piedra resigned just weeks after replacing Kenneth Leet. Piedra was replaced by Joel van Dusen, global head of consumer and retail investment banking.
The bank later hired Lewis Warren away from Citigroup, to take on the role of deputy head of global investment banking. Warren has been tasked with overseeing strategy and improving links between the investment bank and the Charlotte-based group's other divisions.