What to Expect at BofA, Morgan Stanley After Other Big Bank Earnings

Banking, finance, and taxes

Published: July 15, 2014 12:00 pm

Last Updated: April 28, 2020 9:52 am

Tuesday morning reports from both JPMorgan Chase & Co. (NYSE: JPM) and Goldman Sachs Group Inc. (NYSE: GS) continued the string of positive earnings reports from Wall Street’s biggest banks.

Goldman reported diluted earnings per share (EPS) of $4.10 on revenue of $9.13 billion, easily beating estimates for EPS of $3.05 on revenue of $7.41 billion. Investment banking revenues rose 15% to $1.78 billion, with a 47% improvement in the bank’s equities underwriting group leading the way. Institutional client services revenues fell 11% to $3.83 billion, but Goldman was able to offset that drop by a 46% increase in investing and lending revenue to $2.07 billion and an 8% increase in investment management revenues to $1.44 billion.

J.P. Morgan reported EPS of $1.46 on revenue of $25.35 billion, compared to the consensus estimates for EPS of $1.29 on revenue of $23.76 billion. The results looked better than they were because the bank had succeeded in setting expectations quite low.

Before markets open on Wednesday, Bank of America Corp. (NYSE: BAC) is expected to report EPS of $0.29 on revenues of $21.62 billion. In the second quarter of 2013, the bank posted EPS of $0.32 on revenues of $22.73 billion. The EPS estimate has dropped by a nickel in the past 90 days. In the first quarter, it was hit with a huge litigation charge and was forced to pull back its announced dividend increase. Absent those issues, Bank of America should rebound.

Morgan Stanley (NYSE: MS) reports second-quarter results on Thursday, and the consensus estimates call for EPS of $0.55 on revenues of $8.19 billion, compared with EPS of $0.45 on revenues of $8.33 billion in the year-ago quarter. Goldman’s trading desk revenues dropped 11% in the second quarter, and Citigroup Inc. (NYSE: C) posted a drop of 12% in its trading revenues on Monday. Both those reports were not as bad as expected, and Morgan Stanley relied less on commodity and currency trading than Goldman did.

Revenues at all the big banks was expected to be lower than in the same period a year ago, and that has so far turned out to be the case for every one of the financial firms except Goldman, which got a significant boost from its investment banking business. Wells Fargo & Co. (NYSE: WFC), which reported results last Friday, posted revenues that were about 4% below the second quarter of last year. Citigroup reported a drop of 6% on Monday, and J.P. Morgan posted a drop of 2.3% Tuesday.

Shares of Bank of America were up 1% at $15.73 late Tuesday morning, in a 52-week range of $13.60 to $18.03.

Morgan Stanley stock was up 0.8% at $32.06, in a 52-week range of $25.25 to $33.52.

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