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Despite soft i-banking numbers, BofA 'not chasing the market'

Bank of America Corp. executives said the company's investment banking division should be doing better at winning deals, and that the company is willing to lose some business in leveraged lending.

On Oct. 15, the bank reported third-quarter earnings that beat analyst estimates from a net income perspective. But the bank's investment banking division showed weakness, and its stock was down 2% in morning trading while broader market indexes were mostly flat. The bank reported investment banking fees of $1.2 billion for the total corporation, down 18% from the year-ago quarter. Management said the performance was driven partly by a poor showing in M&A.

"A lot of it was driven by the M&A environment where we didn't get our fair share, but the key is to maintain our dominance in debt underwriting and things like that, which we've got to make sure we do," said CEO Brian Moynihan.

CFO Paul Donofrio, who has experience in investment banking, also noted the bank's underperformance in M&A activity, but chose to highlight that there was softness in the leverage business. He said the bank was not willing to do riskier deals to prop up i-banking revenue, noting increased competition from nonbank finance companies.

"At the same time, you've got terms and structures that are getting a little bit more risky, so we are staying focused on responsible growth," Donofrio said. "We're not chasing the market."