Bank Of America & Morgan Stanley Report Results

Bank Of America & Morgan Stanley Report Results

over 3 years ago1 min

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Positive earnings updates from Bank of America and Morgan Stanley on Thursday showed that while the two investment banks have very distinct approaches, they’re not so different after all 🏦

What does this mean?

The second quarter worked out great for the banks’ trading businesses, but not so much for their savings and loans segments. Bank of America drove that home by reporting a big boost to its trading segment – one that led to a better-than-expected quarterly profit, and more than offset the $5 billion worth of new provisions it set aside for future loan losses 💰 The bank also revealed record income from its advisory business, which helps firms sell new debt and takes special-purpose acquisition companies public.

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Those trends benefited Morgan Stanley too, but most of its money comes from investment management. And as luck would have it, that business also did better than analysts expected, enabling the company to beat quarterly profit expectations overall.

Morgan Stanley fared better in wealth management than competitors | OnWallStreet
Morgan Stanley fared better in wealth management than competitors | OnWallStreet

Why should I care?

By Thursday, investors had largely adjusted their expectations for Bank of America and Morgan Stanley based on other big banks’ performances, so neither’s stock rose dramatically 🤷‍♀️ In fact, some investors had already moved onto the next big question for banks: where will future growth come from? One mooted answer is mergers and acquisitions: most big banks won't buy one of their competitors, but those with spare cash may be eyeing up tech companies.

Source: The Wall Street Journal
Source: The Wall Street Journal

In other banking news, JPMorgan’s better-than-expected Tuesday update was one-upped the very next day when Goldman Sachs announced way higher quarterly profit than investors were expecting. Goldman also has one of the smallest consumer banking segments of the big US banks, which kept it relatively safe from the rising risk of loan defaults.

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