Goldman Sachs and Morgan Stanley managed to grow earnings that crushed analysts estimates despite suffering big drops in bond trading revenue. Fred Katayama reports.
Wall Street's marquee investment banks grew quarterly earnings and crushed Wall Street estimates despite suffering big drops in bond trading revenue. Goldman Sach's profit inched higher, buoyed by strong results in investment banking and investing and lending. That offset the 26 percent drop in bond trading revenue - its third straight quarterly decline. The slump in volatility on Wall Street has slammed bond trading at other big banks as well like Citigroup, JPMorgan Chase and Bank of America. KBW analyst Brian Kleinhanzl said, "Overall, Goldman Sachs posted solid results this quarter, and the stock should do well with a rebound in revenue." Morgan Stanley's bond trading revenue fell just a tad less at 20 percent. But its wealth management business's revenue grew to a record high, helping offset the blow from bonds. That helped boost net income 11 percent. It's the latest sign that Morgan Stanley's purchase of Smith Barney is paying off. The wealth management business it acquired helps the company cushion downturns in other businesses. Shares of Morgan Stanley and Goldman opened higher in Tuesday trading.