The latest round of big bank earnings reports for the second quarter has concluded, showing that major U.S. banks remain resilient, continuing to surpass Wall Street expectations.
Goldman Sachs and Morgan Stanley benefited from a booming investment banking sector, driven by a more optimistic economic outlook, increasing certainty around interest rate cuts, and strong markets that have revived Wall Street activity. The U.S. mergers and acquisitions (M&A) market experienced significant growth, with 551 large deals worth at least $100 million each, totaling $758 billion through May, marking an 18.5% year-over-year increase.
Bank of America, the second-largest U.S. bank by assets, provided investors with positive signals despite a decline in profits for the quarter. It reported a strong second quarter, beating Wall Street estimates and offering optimistic guidance for net interest income (NII), which is crucial for the bank given its extensive consumer banking business. Its NII was $13.7 billion, slightly down from $13.83 billion in the same period last year. However, the bank raised its NII guidance to $14.5 billion, expecting continued growth in the latter half of 2024. Bank of America posted $25.4 billion in revenue, up from $25.2 billion last year, surpassing analysts’ expectations. Net income dropped by nearly 7% to $6.9 billion from $7.4 billion, yet still exceeded Wall Street’s projections.
Morgan Stanley reported a 41% increase in second-quarter profits to $3.08 billion, or $1.82 per share, significantly above analyst estimates. Its revenue climbed 12% to $15.02 billion, driven by strong performances in its wealth management and institutional securities businesses. Morgan Stanley’s investment banking revenues rose 51% from the previous year to $1.62 billion due to higher advisory inflows and fixed income growth.
Goldman Sachs saw a remarkable 150% increase in second-quarter profits year-over-year to $3.04 billion, or $8.62 per share, fueled by strong performances in its global banking & markets and asset & wealth management divisions. The firm’s revenue grew 17% to $12.73 billion, exceeding Wall Street estimates by nearly $300 million. Goldman Sachs’ shares increased following the earnings report.
Despite the positive rebound, Goldman Sachs CEO David Solomon noted that transaction volumes remain below the 10-year averages, but expressed confidence that the bank is well-positioned to benefit from a continued resurgence in activity.