Profits fell at Wall Street’s biggest banks in Q3 as they braced for a weaker economy. Investment banking was hit hard as dealmaking dried up. However, investors saw a silver lining with some shares gaining and JPMorgan Chase & Co (NYSE:JPM) beating estimates.
On Friday, JPMorgan, Morgan Stanley, Citigroup Inc and Wells Fargo & Co reported earnings, showing a fall in net income. JPMorgan reported a 17 per cent fall in third-quarter profit to USD 9.74 billion. On the other hand, Morgan Stanley reported a 30 per cent decline in profit to USD 2.49 billion. Wells Fargo posted a 31 per cent fall to USD 3.53 billion. Citi reported a 25 per cent drop to USD 3.5 billion.
Morgan Stanley’s earnings showed that investment banking revenue more than halved to USD 1.23 billion, with declines across the bank’s advisory, equity and fixed income segments.
Corporations’ interest in mergers, acquisitions and initial public offerings (IPO) dried up, hitting banks strong in investment banking. Global M&A (merger and acquisitions) lost ground in the third quarter, with volumes in the United States plunging nearly 63 per cent as the rising cost of debt forced companies to postpone big buyouts.
Morgan Stanley’s shares slid 3 per cent in premarket trading.