Wall Street's Big Banks Earn $43.5 Billion, Led by Equities Trading
Keypoints:
- The six largest US banks earned a combined $43.5 billion in the third quarter on about $165 billion of revenue
- Equities trading rose 72% at Goldman Sachs and 49% at JPMorgan Chase
- Goldman Sachs earned $17.01 per share against a $13.09 consensus
- JPMorgan Chase missed revenue estimates because of slower investment banking and a securities loss
- Citigroup reported its best third-quarter revenue in a decade
US bank earnings season opened on 13 October, and trading desks carried the quarter. The six largest banks earned a combined $43.5 billion on roughly $165 billion in revenue. Equities trading rose 72% at Goldman Sachs, 49% at JPMorgan Chase, 41% at Morgan Stanley, 14% at Citigroup and 11% at Bank of America.
Goldman Sachs delivered the biggest surprise. Net revenue was $18.68 billion, up 23% from a year earlier and the second-best quarter in the firm's history. Net earnings rose 29% to $5.29 billion. Earnings of $17.01 per share beat analyst expectations of about $13.09. Global Banking and Markets revenue rose 32% to $13.46 billion. Asset and Wealth Management revenue rose 14% to $5.05 billion, with record management fees of $3.59 billion.
JPMorgan Chase had a rarer outcome. It earned $15.3 billion, or $5.57 per share, but revenue of $50.2 billion missed estimates. A slowdown in investment banking and a significant securities loss weighed on results. Wells Fargo earned $5.95 billion, or $1.87 per share. Revenue of $21.87 billion came in about 2% below forecasts, though loans and deposits each grew 11% from a year earlier.
Citigroup's profit rose 40% to $5.2 billion on revenue of $23.8 billion, its best third-quarter revenue in a decade. Morgan Stanley posted the highest return on tangible common equity, at 22.6%. Bank of America and Morgan Stanley reported on 14 October.
Executives struck a careful tone. According to The Associated Press and Fortune, the banks warned that rising interest rates and sticky inflation could weigh on results ahead. Rates matter to banks in two ways. Higher rates can widen lending margins, but they can also slow borrowing and deal activity.