Wall Street Revival Solidifies After Q3 Reports From Bank of America, Citigroup And Goldman Sachs

Bank of America Corporation BAC, Citigroup Inc C and The Goldman Sachs Group Inc GS were the latest to report better than expected quarterly earnings, beating gloomy forecasts, just like their banking peers Wells Fargo & Company WFC and JPMorgan Chase & Co JPM did last Friday. 

Morgan Stanley solidifies dealmaking revival with a surge in investment banking.

Net revenue grew 16% to $15.4 billion. Fixed income and equities trading revenue grew 13% to $5 billion. Revenue from investment banking fees surged as much as 56% YoY to almost $1.4 billion, as Morgan Stanley made the largest leap among big banks with JPMorgan Chase, Wells Fargo, Goldman Sachs, Bank of America and Citigroup also recording a rise in revenue both from equities and investment banking fees. 

Wealth management’s net new assets grew 79% YoY and 76% compared to the previous quarter to $64 billion with revenues rising 13.5% YoY to $7.3 billion.

With investment banking having picked up, along with an increase in trading, net profit went up by 32% YoY to $3.2 billion.

Citigroup’s profit has been hit by credit losses but earnings topped estimates.

Citigroup reported strong third quarter results fueled by the same trend reported by Morgan Stanley: growth in investment banking and wealth management. However, Morgan Stanley has also set more money aside to offset potential loan losses. During the third quarter, Citigroup reported revenue grew merely 1% YoY to $20.32 billion, but still surpassing LSEG’s estimate of $19.84 billion. Banking revenue surged 18% with investment banking rising 31%, while wealth revenue grew 9%. Equity markets revenue grew 32%, but fixed income revenue dipped 6%. Determined to do its transformation right, Citigroup drove expenses down 2% YoY as it remains on track to achieve its full year expense target range between $53.5 billion and $53.8 billion, excluding some regulatory costs.

Earnings per share of $1.51 surpassed LSEG’s consensus estimate of $1.31 but net income fell to $3.2 billion due to a higher cost of credit.

Goldman Sachs sees profits leap with a steady economy.

Goldman Sachs topped both revenue and profit estimates with its third quarter results. It reported third quarter revenue rose 7% to $12.70 billion, surpassing LSEG’s estimate of $11.8 billion, while profit surged 45% YoY to $2.99 billion, or $8.40 per share, also topping LSEG’s consensus estimate of $6.89 per share. Investment banking revenue went up 20% to $1.87 billion, followed by equities trading posted revenue grew 18% to $3.5 billion, the asset and wealth management division reported a 16% rise as revenue grew to $3.75 billion. On the other hand, fixed income trading revenue went down 12% YoY to $2.96 billion. 

Bank of America, Morgan Stanley and Citigroup continued last week’s trend that got kicked off by reports from JPMorgan Chase and Wells Fargo, as big banks reported a strong third quarter in a constructive and undoubtedly improved macroenvironment.

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