Goldman Sachs, Bank of America and Morgan Stanley latest to report decline in equities

The three banks all experienced decreases in equity revenues, however, Bank of America stood out amongst the three with increases in total revenue and net income.

Goldman Sachs, Bank of America and Morgan Stanley have reported their Q1 earnings with varying results in net revenues, however a common denominator among the banks was a decline in equity revenues.

Goldman Sachs reported a $12.2 billion net revenue for the first quarter of 2023, a decline by 5% compared to the same period last year. The decrease in revenue compared to Q1 2022 reflected lower net revenues in Goldman Sachs’ global banking & markets division.

Fixed Income, Currency and Commodities (FICC) revenues came in at $3.9 billion, a decrease by 17% compared to the same quarter last year. Similarly, net revenues in equities declined to $3 billion, down 7% compared to Q1 2022. Elsewhere, Goldman Sachs’ investment banking fee income was down by just over a quarter (26%) compared to Q1 2022. 

Despite declines in revenue within Goldman Sachs’ global banking & markets division, chairman and chief executive officer, David Solomon, spoke positively about the quarter: “The events of the first quarter acted as another real-life stress test, demonstrating the resilience of Goldman Sachs and the nation’s largest financial institutions. We are operating from a position of strength and remain focused on executing our strategy to further grow our leading global banking & markets and asset & wealth management franchises.”

Bank of America had a more promising start to the year, reporting revenue of $26.3 billion, up 13% compared to the same period last year. Net income rose 15% to $8.2 billion compared to $7.1 billion in Q1 2022.

The bank’s global markets division reported a revenue of $5.6 billion, up 6% compared to the same period last year – which the bank attributed to higher sales and trading revenue, partially offset by lower investment banking fees. Net income within the division increased by 6% to $1.7 billion.

FICC revenues reached $3.4 billion, an increase by just over a quarter (27%) compared to the same period last year. However, equities revenue was less positive, decreasing by 19% to $1.6 billion, driven by weaker trading performance and lower client activity in derivatives and cash.

“Our results demonstrate how our company’s decade-long commitment to responsible growth helped to provide stability in changing economic environments,” said Brian Moynihan, chair and chief executive of Bank of America.

Elsewhere, Morgan Stanley reported net revenues of $14.5 billion for Q1 2023, down from $14.8 billion in the same period last year. Similarly, net income was down from $3.7 billion in Q1 2022 to $3 billion in Q1 2023.

Investment banking revenues at Morgan Stanley reached $1.2 billion, down by nearly a quarter (24%) from the same period last year. Equity net revenues also saw a decline, totalling $2.7 billion (down 14% compared to Q1 2022). The bank attributed the decrease in revenues to lower volumes and declines in global equity markets compared to a year ago.