Citi Updates GS & MS Earnings Estimates

Citi has updated its estimates for Goldman Sachs GS and Morgan Stanley MS by reducing estimates. GS and MS has smaller DCM platforms and are therefore less optimistic on Q3 trading performance given general soft market activity levels. Citi maintains Q3 estimates for J.P. Morgan JPM and Bank of America BAC. GS estimates are reduced to $2.30 from $3.00 (vs. consensus of $3.35) and MS estimates are reduced to $0.10 from $0.58 (vs. a consensus of $0.54). Overall views on regulation seem upbeat. Citi says the JPM I-Bank chiefs were confident that market making activities would not be hurt by the Volcker prop trading restrictions, and seemed to downplay possible revenue losses from OTC derivatives reform. Basel 3 is likely to have an impact on the banks. After mitigating actions and realigning business for capital efficiency, BAC and JPM executives seem confident that Basel rules would be manageable. BAC closed Friday at $13.55 GS closed Friday at $150.39 JPM closed Friday at $39.76 MS closed Friday at $27.19