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Good things come in threes—but that doesn’t necessarily apply to big bank earnings.
From the latest Morgan Stanley, Bank of America, and Goldman Sachs reports, it’s a slightly muddled, sometimes negative picture. More than anything, the latest big bank reports sour the better-looking first batch of Q2 earnings from JPMorgan Chase, Wells Fargo, and Citigroup.
The big laggard was Goldman Sachs, which has been struggling with investment banking and trading recently. Profits plunged 58 percent from a year ago to $1.22 billion; its investment banking revenue dropped around 20 percent. In a statement, Goldman Sachs CEO David Solomon said he was “fully confident that continued execution” will allow the firm to deliver on its “through-the-cycle return targets and create significant value for shareholders.”
Meanwhile, Morgan Stanley posted earnings and revenue beats, but it wasn’t a total home run. Profit dropped ~13% to $2.18 billion on the back of layoffs that led to $308 million in severance costs. It was ultimately the bank’s record wealth management revenue, which jumped to $6.7 billion from $5.7 billion last year, that buoyed Morgan Stanley’s earnings.
“The firm delivered solid results in a challenging market environment,” Morgan Stanley CEO James Gorman said in a statement. “The quarter started with macroeconomic uncertainties and subdued client activity, but ended with a more constructive tone.”
Bank of America also beat estimates, posting earnings and revenue beats. Earnings increased 19% to $7.4 billion, while revenue jumped 11% to $25.2 billion.
Wells Fargo and Bank of America both benefited from charging customers higher interest rates, but JPMorgan was the big winner, posting a 44% jump in net interest income that helped drive its major quarterly profit surge.
While the first round of big bank earnings seemed to signal blue skies and brighter days, this bunch offers a slightly less sunny outlook, primarily on Goldman’s weak report. But Bank of America CEO Brian Moynihan maintained optimism in statements tied to his company’s report.
“We delivered one of the strongest quarters and first half net income periods in the company’s history,” he said, adding that the firm continued “to see a healthy US economy that is growing at a slower pace, with a resilient job market.”