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By Aparajita Saxena and Matt Scuffham
(Reuters) – Major Wall Street investment banks announced Tuesday quarterly earnings above expectations, supported by strong stock trading and stock underwriting, closing the quarter that was strong. for the big American banks.
Morgan Stanley (NYSE: MS) earnings from investment banking and trading activities outperformed those of its traditional rival Goldman Sachs Group Inc. (NYSE: GS), which released its latest results under the The authority of its managing director, Lloyd Blankfein.
However, Goldman's trading and underwriting revenues were much better than Morgan Stanley's during a quarter marked by uncertainties in global financial markets resulting from a trade war ongoing between Beijing and Washington.
Jon Pruzan, chief financial officer of Morgan Stanley, has spoken with analysts about a call after the results. He expects the company to become the leading equity trader in terms of global market share this year.
The strength of the equity trading desks of the two banks eased the weakness of bond trading, in line with the general trend observed in the sector in the third quarter.
Both banks lack large consumer credit units that have fueled the profits of rivals such as Citigroup (NYSE: C) and JPMorgan Chase & Co (NYSE: JPM), and instead rely on their trading desks.
To offset the ups and downs of trading activity, Morgan Stanley and Goldman have attempted to diversify into the areas of credit and wealth management.
Morgan Stanley shares rose 2.4%, while Goldman shares rose about 1% early in the session.
Bank stocks have been under pressure this year as investors and analysts question their growth strategies.
The S & P financial index <.spsy> fell 6% this year, largely underperforming the market. Morgan Stanley and Goldman have lost more than 15% of their value this year, making them the two worst-performing stocks among the six big banks.
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Investment bankers helped banks generate big gains during the quarter. Goldman Investment Bank's revenues rose 10% to $ 1.98 billion, with the board's business turnover reaching its highest level in three years, and the bank has gained more in helping businesses become public.
This compares to a 15% increase in Morgan Stanley's business turnover, which reaches $ 1.46 billion.
Credit Suisse analysts expected revenue from Goldman and Morgan Stanley's investment banking activities to be $ 1.73 billion and $ 1.34 billion, respectively.
The stock trading offices of the two banks also recorded gains of 7% and 8% respectively.
However, bond trading has not been so successful.
Morgan Stanley's bond trading revenues increased only 1%, but outperformed Goldman, which recorded a 10% decline in business revenues.
"Very good results, given the unstable backdrop and the way Morgan Stanley continues to perform well," wrote the ISC Evercore analysts in a note.
In total, Morgan Stanley posted net earnings of $ 1.17 per share, exceeding the average estimate of $ 1.01 per share, according to Refinitiv's I / B / E / S data.
Goldman's earnings per share were $ 6.28, compared to an estimate of $ 5.38.
(Report by Aparajita Saxena, Sweta Singh and Siddharth Cavale in Bengaluru, written by Sweta Singh, edited by Saumyadeb Chakrabarty)
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