5 months ago • 2 mins
What’s going on here?
Morgan Stanley and Bank of America joined the expectation-beating bank brigade on Tuesday.
What does this mean?
After JPMorgan, Citi, and Wells Fargo set the stage with stellar results last week, Bank of America kept the momentum going. The firm cashed in on higher interest rates, raking in money from customers’ payments on loans. And the good news didn’t stop there: its investment banking business also outperformed, growing versus the same time last year and helping prop up results. The upshot of that: both revenue and profit outstripped expectations.
And that brings us to Morgan Stanley: the firm’s dealmaking and trading didn’t hit any high notes, but it did have wealth management to shore things up. The division, which manages the money of the deep-pocketed and well-heeled, posted record revenue last quarter, helping the firm beat expectations overall.
Why should I care?
The bigger picture: Wealth is wealth.
Morgan Stanley chose to lean into its wealth management business after the financial crisis struck, and for good reason. See, the sector’s a steady Eddie, less prone to market rollercoasters and churning out more consistent income than the high-stakes world of trading and dealmaking. Plus, wealth management’s a bit like Hotel California: customers check in, but they rarely leave. That helped it hit the jackpot last quarter – and the firm’s planning to lean in further, with the aim of doubling the segment’s profit in the coming years.
Zooming out: Goldman Sags.
This earnings season has been a win for big US banks so far, but there’s one big dog left to report: Goldman Sachs. And with down-in-the-dumps investment banking as its mainstay, analysts are already predicting one of Goldman’s worst quarters in years. Mind you, though, JPMorgan and Bank of America did manage to beat estimates for their investment banking businesses – so maybe there’s hope Goldman can pull an expectation-beating quarter out of the hat too.
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