Wall Street giants Goldman Sachs and Morgan Stanley today comfortably beat third-quarter market expectations, boosted by the results of a strategic redirection
Shares in the duo had mixed fortunes though, with Morgan Stanley's stock rising 0.6 per cent and Goldman equities falling 1.7 per cent.
Quarterly profits at Morgan Stanley rose 11 per cent, helped by a strong performance in the lender's wealth management and investment banking businesses. Total revenue was $9.2bn (£7bn), compared with a Reuters analyst poll that forecast $9.01bn.
Morgan Stanley chief executive James Gorman said: "Our third quarter results reflected the stability our wealth management, investment banking and investment management businesses bring when our sales and trading business faces a subdued environment."
Meanwhile, Goldman posted net income of $5.02 per share compared with $4.17 pencilled in by analysts.
Bond trading revenue fell 26 per cent but was much better than expectations. Goldman reported previously reported 40 per cent slump in bond trading in the second quarter.
”After two quarters in a row severely missing Wall Street’s bond trading estimates, Goldman’s 26 per cent decline did not look so bad," Oppenheimer analyst Chris Kotowski told Reuters.
City Index market analyst Ken Odeluga said:
Goldman and particularly Morgan Stanley benefited from switches of emphasis to institutional investment banking and wealth management. Morgan Stanley's wealth division notched its best-ever quarter with an 8.7 per cent rise on the year to $4.2bn, and 12.7 per cent rise in investment banking to $1.38bn.
IG market analyst Joshua Mahony said: "The impressive overall profitability in US banking does help instil confidence in an environment of rising rates."