Goldman
Sachs Group Inc. posted flat
third-quarter net income as the investment bank offset a 44% slump in fixed
income revenue with sharply lower expenses
Earnings easily beat the estimates of analysts polled by
Thomson Reuters, though revenue was well below expectations
The bank also raised its quarterly dividend by five cents
to 55 cents a share
Goldman posted net income of $1.52 billion, compared with
year-earlier net income of $1.51 billion Earnings per share--reflecting the payment of preferred dividends--were $2.88 from $2.85 as the number of shares outstanding fell roughly 3%
Net revenue, including net interest income, fell 20% to
$6.72 billion
Analysts expected per-share earnings of $2.43 on revenue
of $7.36 billion
The bank's revenue from fixed income, currency and
commodity trading totaled $1.25 billion, versus $2.22 billion a year earlier and
$2.46 billion in the prior quarter Analysts had widely expected Goldman to post lower fixed income trading revenue as, similar to other banks, it was hurt by slumping bond markets this summer caused by uncertainty around the Fed's tapering move and the political uncertainty abroad and domestically
But results were expected to be bolstered by strong revenue from its investing and lending and investment management arms as well as better results from its equities business
However, total equities revenue came in at $1.62 billion, compared with $1.96 billion a year ago and $1.85 billion in the second quarter
Equities trading no longer reflects results from Goldman's reinsurance business
The bank in May completed the sale of a majority stake in that business in a bid
to adapt to higher capital requirements
Total operating expenses dropped 25% to $4.56 billion
By Saabira Chaudhuri
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Morgan Stanley swung to a third-quarter profit, solidly beating analyst estimates, as strong results in the company's wealth management business helped offset a slump in fixed-income trading revenue.
Shares jumped 4.2% to $30.15 premarket trading. Through Thursday's close, the stock has risen 51% so far this year.
For the quarter, Morgan Stanley reported net income of $906 million, compared with a year-earlier loss of $1.02 billion. The year-ago figures were weighed down by a charge of more than $2 billion related to the mark-to-market changes in Morgan Stanley debt prices.
The results underscore efforts by Chief Executive James Gorman to transform the New York investment bank into a less risky, more diversified firm.
At Morgan Stanley, results beat the consensus estimates of analysts polled by Thomson Reuters.
This year's figures showed progress in the company's move to grow its wealth management business while reducing its dependence on less volatile bond-trading businesses.
Wealth-management revenue rose 8% from a year earlier while fixed-income trading revenue-- excluding DVA--was down 43% from a year earlier to $835 million.
Morgan Stanley has accelerated its push away from trading, closing the final stage of its multi-year deal to buy the old Smith Barney brokerage business from Citigroup Inc.
The two banks had previously had a joint venture, but Citigroup sold its remaining stake to Morgan Stanley in June
For the third quarter, Morgan Stanley's per-share earnings, which reflects the payment of preferred dividends, were 45 cents compared with a loss of 55 cents a share a year earlier.
Stripping out the impact of changes in the value of the company's own debt, or DVA, per-share earnings were 50 cents versus 28 cents a year ago.
Excluding DVA, revenue rose 7.4% to $8.1 billion. Analysts polled by Thomson Reuters most recently expected per-share earnings of 40 cents, on revenue of $7.7 billion, both excluding DVA
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