US bank earnings: How did Morgan Stanley and Bank of America perform in Q3?

Morgan Stanley and Bank of America Corp. reported mixed third-quarter results on Wednesday, highlighting diverging performances across trading businesses at major US banks amid market volatility, elevated oil prices and geopolitical uncertainty.

Morgan Stanley posted higher profits, supported by stronger-than-expected equity trading revenue and record inflows into its wealth-management business. Bank of America, however, reported a decline in profit after setting aside $1.2 billion to cover regulatory penalties related to alleged failures to detect potential money laundering and other illicit activities.

The results completed the third-quarter earnings announcements of the six largest US banks, following reports from four lenders on Tuesday. Goldman Sachs, Citigroup and Wells Fargo exceeded Wall Street's estimates, while JPMorgan Chase reported profits below analysts' expectations for the first time in nearly three years.

Quick answers to key questions

•5 QUESTIONS

1

How did Morgan Stanley and Bank of America perform in Q3?⌵

Morgan Stanley’s net income rose to $4.97 billion from $4.66 billion a year earlier. Bank of America’s net income fell 17%, as a $1.2 billion regulatory charge weighed on results.

2

What drove Morgan Stanley’s higher Q3 profit?⌵

Stronger-than-expected equity trading and growth in wealth management supported earnings. The wealth-management division reported $9.1 billion in revenue and record net new assets of $232 billion.

3

Why did Bank of America’s profit decline in Q3?⌵

A $1.2 billion non-tax-deductible charge related to regulatory penalties over alleged money-laundering and sanctions-compliance failures reduced earnings by 17 cents per share. The charge contributed to a 17% fall in net income.

4

How did Morgan Stanley and Bank of America’s trading businesses compare?⌵

Morgan Stanley’s equity-trading revenue reached $5.8 billion, helping lift total trading revenue to $7.81 billion. Bank of America’s fixed-income trading revenue fell 17% to $2.55 billion, while its equity-trading revenue rose 10% to $2.51 billion.

5

How did Bank of America’s loans and investment banking perform in Q3?⌵

Its loan balances increased 6.3% year over year to $1.23 trillion. Investment-banking revenue fell 11% to $1.82 billion, while merger-and-acquisition advisory fees declined 19%.

The earnings season unfolded against a turbulent backdrop, with the conflict in Iran, elevated energy prices and a global bond-market selloff affecting financial markets and dealmaking activity.

Morgan Stanley reported net income of $4.97 billion for the third quarter, up from $4.66 billion a year earlier.

Revenue from its equity-trading business reached $5.8 billion, significantly exceeding analysts' expectations of $4.9 billion. Total revenue from trading operations stood at $7.81 billion, compared with estimates of $7.31 billion.

The bank's wealth-management business also delivered strong growth. Revenue from the division increased to $9.1 billion from $8.2 billion a year earlier, while net new assets reached a record $232 billion during the quarter.

The strong performance reflects the contribution of Morgan Stanley's wealth-management operations and trading activities amid changing market conditions.

Chief Financial Officer Sharon Yeshaya said the bank expected to benefit if the initial public offering (IPO) market remained active over the next 12 months. She added that she did not anticipate a slowdown in new public listings.

Despite the earnings performance, Morgan Stanley shares fell 2.2% in early New York trading on Wednesday. The stock had gained 5.1% through Tuesday.

Bank of America's third-quarter earnings were weighed down by a $1.2 billion non-tax-deductible charge associated with regulatory penalties over money laundering and sanctions violations.

The provision reduced earnings by 17 cents per share and contributed to a 17% decline in net income. The bank's total revenue was nearly $30 billion, below analysts' consensus estimates.

Its trading businesses also delivered weaker-than-expected results. Fixed-income trading revenue declined 17% to $2.55 billion, while equity-trading revenue increased 10% to $2.51 billion.

Bank of America shares slumped 7.2% at 9:32 a.m. in New York following the results.

Despite the earnings pressure, Bank of America's loan balances increased 6.3% year-on-year to $1.23 trillion at the end of the third quarter, matching analysts' estimates.

Investment-banking revenue fell 11% to $1.82 billion, although the figure exceeded market expectations. Fees from merger-and-acquisition advisory services declined 19%.

Equity-issuance revenue rose 9.1%, while revenue from debt issuance fell nearly 14%.

The contrasting results underscore differences in trading performance, regulatory costs and investment-banking activity across major US lenders.

With a distinguished career spanning nearly two decades at the highest levels of financial journalism, Rajendra Kumar Saxena stands as a cornerstone of the editorial leadership team at Livemint.com. In his current capacity as Content Editor, he is responsible for managing the comprehensive editorial lifecycle of the publication. His role is multifaceted, encompassing the strategic selection of high-impact stories, original reporting, and meticulous editing. <br> Furthermore, Rajendra is instrumental in executing a sophisticated Search Engine Optimization (SEO)-driven content strategy, ensuring that the platform's digital content reaches a global audience while maintaining the highest standards of journalistic integrity and accuracy prior to publication. <br> Rajendra’s professional journey is characterized by a profound expertise in a wide array of critical sectors. His analytical depth covers global economics, commodities, and stock market dynamics (across both Indian and United States landscapes). <br> Beyond the financial markets, he possesses a keen understanding of political affairs, banking and finance, foreign affairs, and the rapidly evolving technology sector. <br> His eighteen years journey in financial and business journalism includes a significant tenure at Financialexpress.com and freelance contributions to The Hindu. <br> Currently based in Delhi, Rajendra holds a Master of Journalism degree from the prestigious Makhanlal Chaturvedi National University of Journalism and Communication (MCNUJC). His blend of academic rigor and decades of on-the-ground experience makes him a leading voice in navigating the complexities of today’s financial world.

Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

HomeCompaniesCompany ResultsUS bank earnings: How did Morgan Stanley and Bank of America perform in Q3?

✕

Wait for it…

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.