| Earnings wrap: big banks top estimates as i-banking surges and spending stays solid |
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| Wall Street POV… Investment-banking biggies including Morgan Stanley and Goldman Sachs unloaded sturdy Q3 results after rate cuts boosted dealmaking optimism (think: acquisitions, IPOs). Morgan Stanley shares hit a record high after a surge of M&A activity pushed its investment-banking revenue up 56%. Goldman’s profit jumped 45% to $3B, fueled by its i-banking biz. While IPO volumes are still below their 2021 peak, the lure of lower interest rates and this year’s market rally have pushed more companies to go deal hunting. Main Street POV… JPMorgan Chase, Citibank, Bank of America, and Wells Fargo beat estimates as consumer spending stayed strong. Citi said high earners led splurging for the quarter, while middle- and lower-income customers cut back. Bank of America added 360K new consumer checking accounts and 1M new credit-card accounts. But as Americans rack up record debt, Chase, Bank of America, and Wells Fargo wrote off more unpaid loans as losses. Forward POV… Falling interest rates are a double-edged sword for banks. On the one hand, they tend to boost spending and dealmaking. On the other, they can reduce the $$ banks make on loans like mortgages and credit cards. Net interest income is expected to dip next year as rates drop. |
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