Bank of America Chief Financial Officer Bruce Thompson dispelled some of the worst fears about revenue from capital markets this quarter, saying that volumes are down but not as much as late last year.
Given some of the recent market volatility, second-quarter trading volumes and investment banking activity “has been a little bit slower” than in the first-quarter, Thompson said at the Morgan Stanley Financial Services Conference in New York. But “you think about the last couple of quarters we’ve gone through… it was clearly much better than what we saw during the second half of last year.”
Several analysts have reduced their earnings estimates for diversified banks like J.P.Morgan and securities firms like Morgan Stanley because markets have been rattled by fears about the European fiscal crisis, the cooling economy in China, and slow job creation in the U.S.
Goldman Sachs analysts, for example, lowered estimates on banks to reflect a projected 30% quarter-on-quarter decline in capital markets revenue. The firm reduced second-quarter profit estimates for Morgan Stanley, Citigroup, J.P.Morgan and Bank of America. David Trone of JMP Securities downgraded all four and Goldman Sachs to “underperform” on May 21 because he expected shares and earnings “to fall significantly over the balance of 2012.”
- Morgan Stanley’s Gorman: Three-Notch Cut Would Be ‘Somewhat Stunning’ – Deal Journal – WSJ (nadernazemi.com)
- Carlyle Gets its First Ratings: Credit Suisse Plays the Bull – Deal Journal – WSJ (nadernazemi.com)