Goldman And Morgan Stanley Round Out Big Bank Reporting Today
Estimize | Oct 17, 2017 12:12AM ET
Investment banks Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) will be reporting their quarterly earnings this morning before the market opens. Here’s a look at how they are predicted to fare for Q3:h3 Goldman Sachs /h3
Financials - Capital Markets | Reports October 17, BMO
After a steady end to 2016 and first quarter of 2017, Goldman Sachs’ EPS fell significantly quarter-over-quarter in Q2, but still increased 6% on a year-over-year basis. Third quarter expectations are predicting the first decline in YoY profits since Q3 2015, with Estimize data showing a fall of of 11%, despite recovering 10% since last quarter. Estimize and Wall Street estimate EPS at $4.35 and $4.31 respectively, whilst the Street’s revenue predictions at $7.638B are slightly below Estimize’s estimated $7.547B. By reference, Goldman Sachs tends to beat Estimize 78% and Wall Street 89% of the time in EPS predictions.
In the past week, reports have come out to suggest that the investment bank may be introducing a new trading operation for Bitcoin and other cryptocurrencies. CEO Lloyd Blankfein has remained somewhat tight-lipped about his thoughts on Bitcoin, unlike CEO Jamie Dimon of JPMorgan (NYSE:JPM), who has strongly voiced his skepticism. If it made this shift, Goldman Sachs would be the first major player on Wall Street to do so, and might even see others like Morgan Stanley follow. The investment bank has also recently joined JPMorgan in offering clients new investment products of betting against AT1s (Additional Tier 1 Notes).
h3 /h3Financials - Capital Markets | Reports October 17, BMO
Like Goldman Sachs, Morgan Stanley too reached a peak in the first quarter before falling and now starting to bounce back. For this quarter, Estimize and Street data predicts EPS to be approximately $0.84 and $0.81, with revenue coming out at $9.066B and $8.947B respectively. MS tends to outperform the Estimize and Wall Street estimates more than 70% of the time. Since the results of the second quarter, Morgan Stanley has shown indications of outperforming its old rival Goldman Sachs, and the recent quarterly results should confirm that. Another positive to take away for Morgan Stanley is their predicted YoY growth, which is expected to be around 4% for EPS and 2% for revenue.
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However, revenues range across the divisions. With equities trading looking strong and FICC trading revenues likely to continue their descent, it will be interesting to see what figures Morgan Stanley posts for investment banking revenues this quarter. With the current slump in trading revenues, it can be said that both investment banks have seen better days. Where Citigroup (NYSE:C) posted positive growth in investment banking revenues, JP Morgan recorded a decline.
For long-time rivals Morgan Stanley and Goldman Sachs, each is looking to rely more heavily on the performance of their investment banking and equity trading divisions with fixed income figures continuously emerging sub-par this year. Revenue pressures “might lead some banks to further restructure, which could potentially weaken their business stability or capital generation,” according to S&P Credit analyst Richard Barnes.
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