Things are bad. Two out of three Federal Reserve officials agree. (God love the eternally optimistic and ambitious James Bullard.) Citi, JPMorgan and Wells all saw their quarterly profits drop in this plague season, with the latter permitted only a humiliating 10 cent dividend. Sure, the markets soared, but that’s just sort of what they do now regardless of how grim the outlook.
Things are indeed bad. But they’re getting better, according to someone whose bank just saw its profits plummet 52%.
“As states began to reopen in the past couple months, we saw an improvement in spending levels as customers became more active buying fuel and spending on home projects and eating out,” [Bank of America CEO Brian Moynihan] said on a call with analysts.
Sure, BriMo wouldn’t seem to have much to celebrate, but in truth things really did just get better from there.
Quarterly earnings were roughly flat from a year ago at $2.4 billion. Per share, that amounted to $6.26. That far outpaced expectations of Wall Street analysts, who had expected Goldman to earn $1.12 billion, or $3.90 a share.
Bankers attributed a surge in fixed-income trading revenue in large part to historic levels of corporate-debt issuance…. That debt issuance was facilitated by the Federal Reserve’s efforts, ranging from near-zero rates to liquidity facilities to direct market buying.
Still, that doesn’t compare to Morgan Stanley: Jim Gorman’s shop managed a record quarterly profit, coronavirus be damned, with trading and investment banking revenues both up by double digits, and a mere $239 million cushion for impending loan defaults. Things were so good Morgan Stanley could have increased its dividend just to stick it to Charlie Scharf. Not that the ever-pessimistic Gorman will be celebrating much.
“Clearly, it will be challenging for the back half of 2020 to meet the record first half results .... That said, many parts of our business should continue to perform well,” said Gorman.
Bank of America Sees Reasons for Optimism in a Coronavirus Economy [WSJ]
Goldman’s Traders, Bankers Keep Profit Steady While Rivals Falter [WSJ]
Goldman Puts Capital Fears to Bed for Now, With Help From Fed [WSJ]
Morgan Stanley posts record profit on trading boom [Reuters]
Morgan Stanley’s Earnings Were So Good, It Could Have Raised Its Dividend [Barron’s]
Fed’s Brainard Sees Substantial Economic Risks and Slow Recovery [WSJ]
Fed’s Harker says failure to control virus creating more economic uncertainty [Reuters]
Fed’s Bullard Says Economy Can Rebound in Second Half of Year [WSJ]