Wall Street bankers expect third-quarter revenue to be better than normal, but not to match the big gains earlier this year. In the second quarter, the biggest U.S. banks saw surging profits thanks to a boom in stock-market debuts, mergers and acquisitions, and trading activity. Banks reaped the rewards of Space X’s historic initial public offering, while market volatility kept trading floors bustling.
Executives are now guiding for a cooler third quarter for their trading desks, weighed down in part by their fixed-income trading businesses. Markets saw a turbulent summer: the AI trade stumbled, hedge fund Situational Awareness suffered a decline, and leveraged investors unwound risky positions. Stocks recovered, and the S&P 500 ended the quarter with a gain.
“I think it’s safe to say, 3Q is no 2Q,” Morgan Stanley’s Co-President Dan Simkowitz said. JPMorgan Chase Co-President Doug Petno projected markets revenue to grow in the “mid- to high-teens” compared with the year-ago quarter. Citigroup’s finance chief Gonzalo Luchetti expects mid-single-digit revenue growth, while Bank of America Chief Executive Brian Moynihan said trading revenue will be “relatively flat” but one of the best third quarters ever.
Wall Street’s largest banks are due to report third-quarter earnings the week of Oct. 12. Analysts polled by Fact Set expect the five biggest banks’ per-share earnings to grow by an average of 20% from a year ago. Jefferies reported capital markets revenue of $802 million for the quarter ending Aug. 31, up 11%, with equities revenue up 29% to a record high.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing