Wall Street’s biggest banks posted higher third-quarter net income year-on-year, easing investor worries about a potential slowdown in the trading boom. JPMorgan Chase, Citigroup, Goldman Sachs and Wells Fargo all reported profit gains, with Goldman Sachs leading after a 30 per cent increase in adjusted net income. Bank CEOs Jamie Dimon and David Solomon acknowledged uncertainty about how long the strong capital markets environment would last, though they described current conditions as favorable.
Equities trading drove much of the strength, with Goldman’s equities revenues jumping over 70 per cent year-on-year to $6.4bn, twice analyst expectations, and JPMorgan’s up nearly 50 per cent to $5bn. This surge was fueled by hedge fund demand for equity financing, allowing banks to charge attractive rates. Meanwhile, fixed income, currency and commodities (FICC) trading showed weakness, with Goldman and JPMorgan reporting unexpected declines due to rising interest rates impacting credit and mortgage trading.
Citigroup was an exception, posting 4 per cent FICC revenue growth. Net interest income also rose across banks from higher rates, with JPMorgan raising its full-year guidance. Despite inflation pressures, banks cited strong wage growth and employment as offsetting factors, with Wells Fargo’s CFO noting energy costs remain manageable for most consumers.
Source: Financial Times Companies · Summarized by HeadlinesBriefing