Bank earnings soar again, even as their stock prices remain stagnant
JPMorgan, Goldman Sachs and Morgan Stanley all saw trading revenue rise more than 20% in the third quarter, with Morgan Stanley's earnings report Thursday showing profits jumped 25% from a year earlier to $2.72 billion and a 16% increase in revenue, which rose to $11.7 billion.
The big picture: Even after lackluster headline earnings from Bank of America and Wells Fargo, the five biggest U.S. investment banks are on pace to rake in $100 billion in trading revenue this year.
- The trend follows Q2's record for modern Wall Street’s trading and dealmaking units.
- They’ve already generated almost $84 billion, more than any full year since 2010, per Financial Advisor.
- The finance sector’s current earnings decline of 10.5% is less than half the 23.1% decline expected before the banks started reporting results last week.
Yes, but: The banks remain unloved on the stock market. State Street's financial sector ETF is down nearly 20% year to date and its bank-specific ETF, KBE, is down 30%.
- Even after its searing earnings results on Wednesday, Goldman gave back all of its stock gains and then some yesterday.