Morgan Stanley, BofA Add to Wall Street’s Earnings Bonanza

Wall Street is practically drowning in money.

It’s a major week for earnings reports and the numbers have been consistently positive with big banks and wealth managers announcing better-than-expected figures for revenue and client assets. Following strong reports on Tuesday from JPMorgan, Wells Fargo and particularly Citigroup, Bank of America and Morgan Stanley added to the sector’s earnings party yesterday with their own glowing results. Bank of America’s net income rose 17%, for example, to $8.6 billion during the first quarter. At Morgan Stanley, net income climbed 30% to $5.6 billion. It’s a boon for wealth managers and could be a sign of what’s to come as the industry heads into the second half of the year.

There’s a reason why banks have the tallest corporate office buildings in pretty much any big city.

Managing Money Management

Bank of America’s net income from global wealth and investment management came in at $1.3 billion for the quarter, with revenue up 12% from a year earlier due to higher management fees and assets under management. At Morgan Stanley, income and revenues were both up, thanks in part to higher trading activity during the quarter and net new assets of $118 billion, along with $54 billion in fee-based asset flows. 

The figures from other banks this week were also reasons for optimism in the sector:

• Citi’s net income rocketed 42% over a year, to $5.8 billion, which is credited to CEO Jane Fraser’s multi-year streamlining of the bank’s structure into five core businesses. 
• Meanwhile, JPMorgan Chase’s profit surged 13% to $16.5 billion, with stock-trading results contributing to that.
• At Wells Fargo, profit rose less dramatically, up 7% to $5.25 billion, thanks in part to its book of loans being at a six-year high and its traders having a good quarter. 

Certainly Uncertain. Still, company leaders on recent calls pointed to uncertainty stemming from the Iran war and the rise of AI, even as the latter also presents opportunities. Bank of America, for example, has fewer employees today than it did in 2007, before it bought Merrill and Countrywide, thanks to its uses of technology, CEO Brian Moynihan said during the firm’s call with analysts. While attrition is behind a drop of roughly 1,000 full time positions, the company has 90 installations giving all 200,000 employees access to AI, he said. “We’re still in the early stages of what all this will do, but we’re seeing real benefits out of it today.”