The five big Wall Street firms struck gold in the latest quarter as the Fed pumped up markets. But the spoils pale next to crisis costs, writes johnsfoley.
Bank of America reported second-quarter revenue of $22.3 billion on July 16. That was a 3% decline year-on-year, but included a 28% increase in sales and trading revenue, and a record $2.2 billion of advisory and underwriting fees.
Earnings applicable to common shareholders more than halved to $3.3 billion. The U.S. lender reported $5.1 billion in credit costs, including a $4 billion increase in its provisions against future bad debts. Morgan Stanley on July 16 reported a record $13.4 billion of revenue for the three months to the end of June, driven by a 68% increase in sales and trading revenue from last year’s second quarter. Fixed-income revenue increased by 168%.
Earnings applicable to common shareholders of $3 billion were 50% higher than the same period a year earlier. JPMorgan, Citigroup and Goldman Sachs have also reported surges in trading revenue, driven by fixed-income markets, offset in all cases by increased provisions against bad debts.
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