Bank of America profits drop 17% after $1.2bn money laundering fine
Profits at Bank of America (BofA) fell 17 per cent year in the third quarter, after the second-largest US bank took a $1.2 billion (€1 billion) hit from a regulatory fine for money laundering and sanctions violations. BofA said net income dropped to $6.9 billion, down from $8.3 billion a year earlier. The bank reported its results less than 24 hours after the US Treasury said it had fined BofA more than $1 billion for “egregious and continued” money laundering and sanctions violations, concluding the bank failed to properly report more than $5 billion in suspicious transactions. BofA has around 1,200 employees in Ireland. The action from regulators – which included a consent order that requires the bank to work with a third party to identify and report undetected suspicious transactions – raises questions about how much BofA needs to spend on remediation to prove to regulators that it has meaningfully improved its compliance programme. Shares in BofA tumbled more than 8 per cent in morning trading. In a statement on Tuesday, the bank said it “already dedicated substantial personnel and resources to our ongoing remediation efforts, and those costs are in the current expense base”. On Wednesday, BofA’s chief financial officer Alastair Borthwick told reporters that BofA had dedicated “thousands” of employees to remediation work linked to a consent order first imposed in 2024. The bank did not plan to make substantial further hires to address it, he added. “We staffed up overtime and we feel like we’re meeting all the obligations in that consent order at this point,” said Borthwick. BofA was hit with an additional consent order on Tuesday. BofA’s performance fell short of analysts’ expectations even without the impact of the fine. Revenues increased 3 per cent to $30 billion, weighed down by lower trading revenue and investment banking fees. Fixed income revenues have been weak across Wall Street in the wake of the US Federal Reserve raising interest rates last month, including at Morgan Stanley, which also reported on Wednesday. Morgan Stanley posted $2 billion of fixed income revenues, worse than analysts had expected. At BofA, the figure was 17 per cent lower than a year ago, at $2.6 billion. But other parts of Morgan Stanley’s business helped make up for it, with revenues in equities trading – which have continued to benefit from clients’ stock market bets around artificial intelligence – up 41 per cent to $5.8 billion, well ahead of estimates for $4.9 billion. That helped lift Morgan Stanley’s third-quarter profits 6.5 per cent higher than a year ago, to a better than expected $4.9 billion. Morgan Stanley reported net new assets in wealth management of $232 billion, well ahead of estimates for about $112 billion. The figure is closely tracked by investors as a measure of future growth, and beat the record set last quarter when inflows were boosted by SpaceX’s IPO through Morgan Stanley’s work managing the company’s employee stock plan. Morgan Stanley said just over half the inflows were tied to IPOs. Its shares fell 3 per cent in early trading. – Copyright The Financial Times Limited 2026