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Goldman Sachs, JP Morgan Chase, and Morgan Stanley reported strong second-quarter results as increased revenue from investment banking fees offset weaker collections from trading.
Goldman Sachs’ revenues rose 16 percent in this year’s second quarter to $15.4 billion, compared to a year earlier, the bank reported on 13 July.
The bank made 20 percent more money than analysts had expected; the median estimate had been $12.4 billion.
Trading revenue was down 32 percent year on year to $4.9 billion.
Trading activity brought banks windfalls of commissions and fees in 2020 as investors scrambled to exit markets, reallocate their assets, and jump from one investment or market to another as the COVID economy churned.
However, this year markets calmed as the vaccination campaign progressed and the economy showed steady, if bumpy, signs of recovery.
While trading revenue was down, revenue from asset management soared 144 percent to $5.1 billion, year over year, nearly doubling the $2.8 billion analysts had forecast.
The division includes Goldman’s private equity arm, which posted record gains in the quarter, the bank said.
Fees from investment banking services, including managing mergers and acquisitions, reached $3.6 billion, a 36-percent jump from the same quarter last year and the second-highest on record, beaten only by the fees raked in during this year’s first three months, according to the Financial Times.
Wealth management services brought Goldman $1.7 billion, a 28-percent boost, which observers had predicted.
Earnings per share rose to $15.02, up $.53 from the second quarter of 2020, when Goldman sequestered $1.59 billion to protect against possible loan losses.
JPMorgan’s profit more than doubled, year over year, to $11.95 billion on $30.48 billion in revenue, which slipped 8 percent due to lessened trading activity and slimmer loan margins.
The bank profited from the quarter’s $1.42-trillion global market in mergers and acquisitions, an area of activity that remains stronger than usual, according to data firm Dealogic, and from which JPMorgan collected a record $3.57 billion in fees, the bank said, a 25-percent gain year on year. (See “M&A Deals Top $500 Billion in 2021’s First Half,” Trends Journal, 13 July 2021.)
Goldman Sachs and JPMorgan hold the first and second spots, respectively, as the busiest advisors in global M&As; Goldman ranks first in underwriting equity deals, while JPMorgan leads in managing debt deals, Dealogic reported.
Both banks found it necessary to raise pay to attract and hold talent.
“We’re going to do competitive comp no matter what it takes,” JPMorgan CEO James Dimon said in comments quoted by the FT.
At Morgan Stanley, gains in fees for arranging mergers and buyouts more than overcame weaker trading revenue.
Fees totaled $2.4 billion, up 15.8 percent compared to 2020’s second quarter and well above analysts’ forecast of $2 billion.
The bank’s wealth management division reported making 35 percent more loans to rich clients than a year before, reaching $114.7 billion from last year’s $85.2 billion.
The division’s net revenue leaped from $4.7 billion in 2020’s second quarter to $6.1 billion this year.
Morgan Stanley’s overall revenue for the quarter was $14.8 billion, ahead of last year’s quarter by 8 percent and above analysts’ expected $14 billion.
TRENDPOST: As we note in stories like this each week, the COVID War and its aftermath have created unprecedented opportunities for Bigs to fatten themselves even more. They’re expanding their economic and political clout and worsening, even if indirectly, the separation of our economy and society into Bigs who keep taking more, while the plantation workers of Slavelandia, i.e., the general public, are left with less and less.