Wall Street second-quarter results have placed Goldman Sachs and JPMorgan ahead of the competition thanks to profits that beat analysts' forecast.
Goldman Sachs has reported record earnings of $3.44bn for the second quarter of 2009, up 65% from the same period last year, and revenues of $13.76bn. Should such performance be maintained until the end of the financial year, the bank staff could share total pay and bonuses of more than $22bn. Strong revenue growth in its fixed income, commodities and currencies business, and record highs in trading and stock underwriting, strengthened Goldman's leadership over its Wall Street rivals.
Record investment banking and fixed-income revenues also contributed to JPMorgan's results. The bank recorded earnings of $2.7bn, a 36% increase on 2008 second-quarter net income of $2bn; and record revenues of $27.7bn. Growth in commercial banking and good performance of asset management, treasury and securities services and retail banking also supported revenues.
Citi and Bank of America failed to disperse investors' fears over their future as their second-quarter profits were boosted by large one-off gains. Citi reported a $4.3bn profit compared with a loss of $2.5bn a year ago, but earnings were bolstered by the $6.7bn gain from the partial sale of Smith Barney to Morgan Stanley. Bank of America produced second-quarter earnings of $3.2bn thanks to one-time gains, but its profits fell from the same quarter in 2008. Bank of America's takeover of Merrill Lynch has given the combined entity a leading position in wealth management, according to research by Scorpio Partnership, with assets under management of $1500bn. However, the firm's business is concentrated in the US, and the largest non-US wealth manager remains Switzerland's UBS, with $1400bn worldwide.
Morgan Stanley reported a second-quarter loss of $159m due to repayment of government funds and the costs of improving its credit spreads. The bank generated $5.4bn in revenues, a decrease of 11.5% from the same period last year. This is Morgan Stanley's third consecutive quarterly loss.
