REVENUEBeat +2.1%
EPSBeat +3.4%
Actuals vs. estimates
| Metric | Actual | Consensus | Surprise |
|---|---|---|---|
| RevenueNet revenues | $20.34B | $19.93B | ▲ Beat +2.1% |
| EPS(GAAP diluted) | $3.03 | $2.93 | ▲ Beat +3.4% |
Verdict
- Revenue beat: net revenues $20.34 billion against a $19.93 billion estimate, 2.1% above, and up from $18.22 billion a year ago.
- EPS beat: $3.03 per diluted share against a $2.93 estimate, 3.4% above, versus $2.80 a year ago.
- No guidance in the release; ROTCE 22.6% against 23.5% a year ago, Standardized CET1 14.9%.
- The one thing that matters: the beat rests on Equity trading, up 41% to $5.80 billion, and record Wealth Management revenue of $9.07 billion; Fixed Income fell 7% and Investment Management fell 12% on a carried-interest reversal, so the quarter is narrower than the headline.
Key metrics
| Metric | Reported | Prior year | Change |
|---|---|---|---|
| Return on tangible common equity | 22.6% | 23.5% | — |
| Institutional Securities Equity net revenues | $5,799 | $4,116 | up 41% |
| Institutional Securities Fixed Income net revenues | $2,011 | $2,169 | down 7% |
| Wealth Management net revenues | $9,065 | $8,234 | up 10% |
| Wealth Management net new assets ($ billions) | $232.4 | $81.0 | — |
| Standardized CET1 capital ratio | 14.9 % | 15.1 % | — |
Guidance changes
No financial guidance change disclosed.
Quality of earnings
- Wealth Management growth is understated, not flattered. The year-ago $8,234 million included $206 million of DCP mark-to-market gains that are no longer presented in net revenues, which is why transactional revenue reads $1,166 million against $1,308 million.
- Investment Management took a one-off hit. Performance-based income and other swung to $(106) million from $117 million on the reversal of accrued carried interest, pulling segment revenue to $1,459 million from $1,651 million and pre-tax income to $259 million from $364 million.
- Costs grew faster than revenue below the comp line. Non-compensation expenses rose 20% to $5,715 million against 12% revenue growth, and provision for credit losses was $148 million versus nil, including $105 million of corporate and commercial real estate charge-offs.
Gotchas & watch items
- Record $232 billion of Wealth Management net new assets came with just over half associated with IPO-related flows, and the $80 billion of fee-based flows included a new corporate retirement mandate.
- Sequentially the quarter stepped down: net revenues $20,338 million from $21,348 million in the June quarter, diluted EPS $3.03 from $3.46.
- Fixed Income net revenues fell 7% to $2,011 million on weaker securitized products and commodities, and equity underwriting fell to $525 million from $652 million.