Goldman Sachs Group Inc (NYSE: GS) and Morgan Stanley (MS) successfully navigated a difficult trading environment in the third quarter and reported earnings and revenue that topped Wall Street expectations on Tuesday morning. But investors rewarded Morgan Stanley and punished Goldman Sachs stock in morning trading.
Goldman Sachs reported earnings per share of $5.02 on revenue of $8.33 billion. Both numbers topped consensus analyst estimates of $4.17 and $7.54 billion, respectively.
Goldman Sachs also reported a 17 percent decline in fixed income trading revenue and a 26 percent decline in bond trading revenue. Falling trading revenue has been a recurring theme for big banks this year, as global financial markets have demonstrated historically low volatility. In the second quarter, Goldman reported a 40 percent decline in fixed income, currencies and commodities revenue.
GS stock was down 1.3 percent in morning trading.
In the third quarter, Goldman Sachs’ total investment banking revenue of $1.8 billion topped consensus expectations of $1.63 billion. Equities securities revenue was up 51 percent to $1.39 billion.
Also Tuesday, Morgan Stanley reported EPS of 93 cents on revenue of $9.197 billion. Both numbers topped Wall Street forecasts of 81 cents and $9.015 billion, respectively.
Trading revenue dropped 8 percent to $2.9 billion, dragged down by a 21 percent decline in fixed income trading. Equities trading was mostly flat compared to the same quarter a year ago.
Morgan Stanley’s 8 percent decline in overall trading revenue was much better than the double-digit declines other big banks have reported this earnings season. Citigroup (C) trading revenue declined 11 percent and JPMorgan Chase & Co. (JPM) trading revenue dropped 21 percent.
Highlights of the quarter include a 9 percent increase in net wealth management revenue to $4.22 billion, a 4 percent increase in fee-based client account assets to $1 trillion and an increase in wealth management pre-tax margin from 23 percent to 26.5 percent.
According to CNBC, JMP Securities analyst Devin Ryan calls Morgan Stanley’s quarter a “very good quarter despite the difficulties in the trading business.” MS stock was…
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