Tue, Jul. 19, 10:08 AM
- FICC revenue up 20% was a bright spot, but business in other units was sluggish, notably in investment banking, where revenue fell 11%, in part thanks to a slump in M&A business, but mostly due to a major drop in IPO business - equity issuance dropped 55%.
- Both Nomura's Steven Chubak and Citi's Keith Horowitz remind Goldman has already had a nice run on the back of the post-Brexit bounce and earlier earnings reports from JPMorgan, Citi, and Bank of America (Goldman's ahead 10% in July), so perhaps today's pause shouldn't be a surprise.
- Speaking on the earnings call, CFO Harvey Schwartz says client volume levels were down headed into Brexit, but hit peak activity following the shock vote. He doesn't expect Brexit to be a headwind to the bank's business.
- WSJ blog
- GS -0.5%
- Previously: Trading revenue bounces back at Goldman, but conditions remain challenging (July 19)
Thu, Jul. 14, 8:19 AM
- Among the items boosting the quarter was a big rebound in markets revenue (which includes FICC) - up 23% Y/Y to $5.56B. The bank had previously unofficially guided to more than a 10% gain in trading revenue.
- Jamie Dimon has previously said that the myriad legal and regulatory issues pressuring the bank were beginning to dissipate, and this quarter JPMorgan reported a legal benefit of $430M vs. $291M of expenses a year ago.
- Energy? JPMorgan's Corporate & Investment bank booked a $235M credit loss vs. $50M a year ago, though $185M of that loss came from one customer. The commercial bank had a reserve release of $25M vs. needing to add $304M in Q1.
- Citigroup (NYSE:C) +2.6%, Bank of America (NYSE:BAC) +2.1%, Goldman Sachs (NYSE:GS) +2.25%, Morgan Stanley (NYSE:MS) +1.8%, Wells Fargo (NYSE:WFC) +1.4% premarket
Fri, Jul. 8, 10:49 AM
- Jose Manuel Barroso, the former president of the European Commission, has joined Goldman Sachs (GS +2.1%) as non-executive chairman for its international business.
- Barroso, the former prime minister of Portugal, served at the helm of the EC from 2004 to 2014.
- He'll act as an adviser to the wider group as well. "Jose Manuel brings immense insights and experience to Goldman Sachs, including a deep understanding of Europe," says a statement from Michael Sherwood and Richard Gnodde, co-chiefs of the company's international business.
Fri, Jun. 24, 8:27 AM
- "Goldman Sachs (NYSE:GS) has a long history of adapting to change, and we will work with the relevant authorities as the terms of the exit become clear," says CEO Lloyd Blankfein in an internal memo following the Brexit vote.
- He reminds there will be no immediate change as negotiations between the U.K. and the EU on terms of their divorce could take years.
- Goldman has about 6K employees based in London.
- Shares -5.8% premarket
Tue, Apr. 19, 10:03 AM
- We'll do one more post on Goldman's (NYSE:GS) lame Q1 results, but the stock is higher by 2% today, and so gives a pretty good idea of the value of looking backward when picking shares.
- Return on equity during the quarter was only 6.4% - that's against a "more normal" level of 11%, says Evercore's Glenn Schorr, sounding like he's ready to cut his $184 price target. ROE routinely exceeded 30% prior to the financial crisis.
- Nomura's Steven Chubak calls the quarter disappointing, and notes the bank's drop in FICC and equities revenue was among the worst in the industry. The WSJ's Moneybeat blog provides this helpful chart of revenue declines in Q1 among the big banks. Goldman is a major outlier to the downside.
- What the heck happened in Investing & Lending, where revenues fell to essentially zero from $1.7B a year ago? On the earnings call, CFO Harvey Schwartz says investments in public equities more than offset gains in private equity paper, and the lending side of the operation took a hit from energy.
- Now read: Nothing Unexpected And Nothing Good In Bank Results So Far (April 18)
Wed, Apr. 13, 11:31 AM
- JPMorgan's revenues and profits both fell from a year ago, but the lame performance of the banks thus far this year has already priced in a weak quarter. JPMorgan is higher by 3.8%, with Citigroup (C +4.7%), Bank of America (BAC +3.5%), Wells Fargo (WFC +1.7%), Goldman Sachs (GS +2.9%), and Morgan Stanley (MS +4.4%) joining the party. The XLF is higher by 1.75% vs. the S&P 500's 0.7% advance.
- But what about all of these players (except for Citi) having their living wills rejected by the Fed, FDIC, or both? A sideshow, no doubt. Regulators are going to regulate - like the commercial goes, "It's what they do." Banks will tweak plans, numbers, or whatever they need to in order to get D.C. to eventually sign off.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IAI, IYG, FNCL, SEF, FXO, RYF, KCE, FINU, RWW, XLFS, FINZ, FAZZ
Tue, Feb. 16, 7:26 AM
- Both Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) win upgrades to Overweight from Neutral from JPMorgan. Morgan Stanley's new price target of $29 is about 25% above Friday's close and Goldman's price target of $180 represents 23% upside.
- Morgan was a $40 stock late last summer, and Goldman topped out a little earlier at nearly $220.
- Both names are higher in the area of 2% premarket.
- See also: JPMorgan throws in the towel on Credit Suisse (Feb. 16)
Thu, Feb. 11, 2:37 PM
- Oil's lower by 3.3% today, but it's the financial sector (XLE -3.1%) again leading the S&P 500's 2.15% decline.
- For the year, the XLF is down by 17.9%, easily outpacing on the downside energy (down 13%) and the S&P 500 (down 11%).
- With the 10-year yield plunging all the way to 1.6% and short-term rates markets now beginning to price in Fed rate cuts this year, the banks are being hit particularly hard: Bank of America (BAC -8.1%), Citigroup (C -7.6%), JPMorgan (JPM -5.1%), Wells Fargo (WFC -2.9%), Goldman Sachs (GS -5.4%).
- Leading regionals (KRE -4.4%) lower are KeyCorp (KEY -5.9%), Huntington Bancshares (HBAN -4.9%), Fifth Third (FITB -5.4%), and PNC Financial (PNC -4.4%).
- ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, SEF, FNCL, FXO, KBWB, QABA, RYF, FINU, KBWR, KRU, RWW, FINZ, KRS, XLFS
- Previously: Lots of negative rate talk at Yellen hearing (Feb. 11)
- Previously: Insurers punished as rates plunge (Feb. 11)
Tue, Feb. 2, 12:52 PM
- Alongside energy's underperformance today is the financial sector (XLF -2.4%). The long-awaited hope of a sustained rise in interest rates appears dashed once again - at least so far this year.
- The 10-year Treasury yield is lower by seven basis points to 1.88% - a nine-month low - and short-term rate markets are now pricing is less than one 25 basis point rate hike for the remainder of the year.
- TBTFs: Bank of America (BAC -4.4%), Citigroup (C -4%), Goldman Sahcs (GS -4.4%)
- Regionals: U.S. Bancorp (USB -2.5%), Regions (RF -3.1%), SunTrust (STI -4%)
- Life insurers: MetLife (MET -3%), Prudential (PRU -3.2%), Lincoln Financial (LNC -3.7%)
- Online brokerage: Schwab (SCHW -4.2%), E*Trade (ETFC -3.8%), Ameritrade (AMTD -3.6%)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, FINZ, KRS, XLFS
Wed, Jan. 20, 7:53 AM
- Q4 earnings of $765M or $1.27 per share after a $1.8B or $3.41 charge for the mortgage settlement. Backing that out, the bank earned $4.68 per share, cruising past estimates for $3.54.
- Investment Banking revenues of $1.55B up 7% Y/Y. Financial advisory revenues of $879M up 27%. Underwriting revenues of $668M down 11%.
- Institutional Client Services revenues of $2.88B down 9% Y/Y. FICC revenues of $1.12B down 8% - "continued to operate in an environment characterized by low levels of client activity and difficult market-making conditions."
- Investing & Lending revenues of $1.3B down 15% Y/Y.
- Compensation and benefits of $12.68B for the year, roughly flat from 2014. The compensation and benefits ratio of 37.5% up from 36.8% in 2014.
- CET 1 ratio of 12.4% up from 12.2% a year ago. 22.1M shares bought back last year at an average price of $189.41 each. Tangible book value per share of $161.64 up 5% Y/Y.
- Conference call at 9:30 ET
- Previously: Goldman Sachs beats by $1.14, beats on revenue (Jan. 20)
- GS -1% premarket to $155.21 amid a general global market meltdown.
Thu, Jan. 14, 8:20 AM
- The fourth quarter looks like it marked the time when credit costs stopped being a tailwind and began becoming a headwind for the banks, says Hedgeye's Josh Steiner, noting a reserve build of $0.03 per share. Loan loss provisions nearly doubled in the quarter as net charge offs jumped $100M sequentially (mostly related to energy).
- Steiner takes note of speedy loan growth - up 10.6% Y/Y and 3.4% sequentially during Q4 - but scratches his head over wisdom of accelerating lending into the end of the credit cycle.
- As for capital markets, M&A was the only strong area, with advisory revenue up 43% to $622M - a good through for shops like Goldman Sachs (NYSE:GS) and Lazard (NYSE:LAZ). Meanwhile FICC trading revenue fell 3%, equity trading fell 7%, and credit underwriting disappeared. "Flat is the new up in investment bank land," says Steiner's associate Jonathan Casteleyn.
- JPM is higher by 1.95% as the bank gets into its earnings call.
- Previously: JPMorgan higher after earnings beat (Jan. 14)
- Previously: JPMorgan Chase beats by $0.07, beats on revenue (Jan. 14)
Wed, Jan. 13, 1:14 PM
- It wasn't supposed to be this way after the Fed embarked on a rate hike cycle as these yield-starved names could finally look forward to earning a better spread on their money.
- Since the Fed hiked last month, however, the long bond yield has tumbled about 20 basis points, further narrowing the yield curve.
- With today's 1.3% decline, the XLF is lower by 7.6% YTD, about 200 basis points worse than the S&P 500 (but about 250 basis points better than the energy sector).
- TBTFs: Morgan Stanley (MS -3.9%), Goldman Sachs (GS -2.3%), Citigroup (C -1.8%)
- Regionals: U.S. Bancorp (USB -2%), Regions Financial (RF -3.4%), New York Community Bancorp (NYCB -2.2%)
- Mortgage-related names like Ocwen (OCN -6.2%), Nationstar (NSM -5.3%), Walter Investment (WAC -13.9%), and New Residential (NRZ -5.3%) have come in for particular punishment this day and this year. The mortgage REITs too: Hatteras Financial (HTS -4.4%), Western Asset (WMC -3.6%), New York Mortgage (NYMT -2.3%), Five Oaks (OAKS -5.2%), PennyMac (PMT -2.6%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ, XLFS
Oct. 26, 2015, 9:38 AM| Oct. 26, 2015, 9:38 AM | 4 Comments
Oct. 15, 2015, 11:05 AM
- "Investors won't like the quarter," says Evercore's Glenn Schorr, but strong capital ratios, increasing buybacks, decent book value growth, and lots of compensation leverage will help bide time for better markets.
- Reiterating his Buy recommendation, Citigroup's Keith Horowitz says revenue trends looked good despite weak markets, and expense trends were better than expected.
- Comp and benefits expense of $2.35B was down 16% from one year ago, and the comp ratio dipped to 34% from 42% in H1. Barclays Jason Goldberg had hoped for a drop to 33%. Goldman (GS +1.2%) CFO Harvey Schwartz expects a full-year result of about 40% (comp expense often goes up in Q4).
- WSJ's Moneybeat
- Previously: Goldman Sachs slips after reporting sluggish quarter (Oct. 15)
- Previously: Goldman Sachs misses by $0.01, misses on revenue (Oct. 15)
Oct. 15, 2015, 7:46 AM
- Q3 earnings of $1.43B or $2.90 per share vs. $4.57 one year ago.
- ROE of 7% for the quarter, 8.8% for the first nine months of 2015. Tangible book value per share of $162.11. CET 1 ratio of 12.4%.
- CEO Lloyd Blankfein: “We experienced lower levels of activity and declining asset prices during the quarter, reflecting renewed concerns about global economic growth."
- Investment banking revenues of $1.56B up 6% from a year ago, but down 23% from Q2. Financial advisory revenues of $809M up 36% from a year ago thanks to the M&A boom. Underwriting revenues of $747M down 14%.
- Institutional client services revenues of $3.21B fell 15% Y/Y, and 11% Q/Q. FICC revenue of $1.46B fell 33% Y/Y, or 27% once a special gain from last year is excluded. Equities revenue of $1.75B gained 9%.
- Investing & Lending revenues of $670M fell 60% Y/Y, impacted by declining markets late in the quarter.
- Investment management net revenues of $1.42B fell 3% Y/Y and 14% Q/Q.
- Operating expenses of $4.82B fell 5% Y/Y and 34% Q/Q/ Compensation and benefits of $2.35B fell 16% Y/Y. Comp and benefits to revenue ratio of 40% for first nine months or year, flat from last year.
- Conference call at 9:30 ET
- Previously: Goldman Sachs misses by $0.01, misses on revenue (Oct. 15)
- GS -2% premarket
Sep. 28, 2015, 2:48 PM
- It isn't just Glencore (OTCPK:GLCNF, OTCPK:GLNCY) who is tanking, as at least one measure of raw materials producers plunges to seven-year lows following the company's woes and data that showed weakening Chinese industrial profits.
- Shares of Glencore plunged 29% to close at just 69 pence, an all-time low, exaggerated by a damning report that said future earnings are so uncertain that the company may need to direct all of its efforts to repay debt.
- Freeport McMoRan (FCX -10.2%) is hit hard after breaking below support at $10/share, and global mining peers Rio Tinto (RIO -4.1%), BHP Billiton (BHP -4.5%) and Vale (VALE -9.4%) also are smacked down.
- A number of other firms also are in situations not that much different from Glencore, says DTN analyst Darin Newsom, noting that Caterpillar (CAT -2.2%) and Deere (DE -1.6%) have been struggling and adding that pressure on Glencore may “create a vacuum those other struggling companies could get sucked into."
- Along with oil and gas producers and precious metals miners, even financial stocks are affected, with Morgan Stanley (MS -3.6%) and Goldman Sachs (GS -3.4%) underperforming their banking peers, perhaps as investors grow nervous about the potential for any of Glencore's problems possibly blowing back on other commodity trading operations.
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