The big question: How did Wall Street banks perform this quarter? – Detachable sheet

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Last week we covered: What does Marqeta do differently in payments? – 3 questions with the COO of Marqueta, Vidya Peters


How have Wall Street banks performed this quarter?

Goldman Sachs

  • Net revenue fell 48% to $2.79 billion, or $7.73 per share.
  • Net revenue fell to $11.8 billion from $15.3 billion in Q2-21.
  • Net interest income was $1.73 billion, up from $1.6 billion in Q2-21.
  • Provision for credit losses was $6.6 billion versus $9.2 billion in Q2-21.

The bear market-induced decline in mergers and acquisitions across the industry has had an impact on Goldman Sachs. Goldman also tends to profit from rising asset prices through its various investment vehicles, and so the decline in financial assets hit the company during the quarter.

Bank of America

  • Net revenue of $6.2 billion, or $0.73 per diluted share.
  • Total revenue, net of interest expense, rose 6% to $22.7 billion from $21.5 billion in Q2-21.
  • Non-interest expense increased $228 million, or 2%, to $15.3 billion.
  • $2.1 billion increase in the provision for credit losses of $523 million

The increase in net interest income resulted from the lender reaping the benefits of Federal Reserve rate hikes, while second-quarter results were hit by higher expenses related to regulatory settlements.

Morgan Stanley

  • Net revenue was $2.5 billion, or $1.39 per diluted share, compared to net income of $3.5 billion, or $1.85 per diluted share in Q2-21.
  • Net sales were $13.1 billion versus $14.7 billion in Q2-21.
  • Provision for credit losses was $101 billion versus $73 billion in Q2-21.

The bank alluded to the current macroeconomic environment, the Russian invasion of Ukraine, the pandemic’s long tail and inflation – as factors influencing its earnings.

Town

  • Net revenue of $4.5 billion, or $2.19 per diluted share compared to net income of $6.2 billion, or $2.85 per diluted share.
  • Net revenue was $19.6 billion compared to revenue of $17.8 billion in Q2 21, up 11%.
  • Provision for credit losses was $1.2 billion, compared to $1.0 billion in Q2-21.

Citi beat revenue expectations as the bank reaped more interest income and posted strong results in its trading division and institutional services business.

JPMorgan Chase

  • Net revenue was $8.6 billion, down 28%, mainly due to a net build-up of credit reserves of $428 million, compared to a net release of $3.0 billion the previous year, or $2.76 per diluted share.
  • Net revenue was $31.6 billion, up 1% from Q2-21.
  • Non-interest expense was $18.7 billion, up 6%, due to continued investment in the business, including technology and marketing, and higher expenses structural, mainly compensation, partially offset by lower earnings-related compensation.
  • Provision for credit losses was $1.1 billion, compared to $3.3 billion in Q2-21.

The Wall Street trading slowdown has hit JPMorgan, which has one of the biggest operations on the street. Investment banking fees were down and that division’s revenue was hit by $257 million in markdowns on positions held in the firm’s bridge loan portfolio.


Top stories of the week

CFPB
The fintech industry isn’t opposed to regulation, but it wants to know what the rules of the road are
The Consumer Financial Protection Bureau’s decision to end temporary “safe harbors” for two fintech companies, Upstart and Payactiv, was made by mutual agreement, but continues to raise eyebrows in the industry . Although the CFPB may continue to process new applications, people expect the bureau’s bashing of the programs to lead most companies to re-evaluate whether the application is worth the investment of time, effort and cost required. to do it. (Call)

ISIC
Citi removes fees on P2P payments by accepting them as direct deposits
To serve the underserved, Citigroup will now count payments from peer-to-peer services as direct deposits allowing customers to get rid of monthly fees on checking accounts. The new ruling will apply to Access and Basic checking accounts, which come with monthly fees of $10 and $12 — provided consumers don’t pay a bill or maintain a certain amount. Citi is the only FI in the top four in the US that accepts P2P payments this way. (PYMNES)

Citi Commercial Bank debuts in Canada
Citi launched Citi Commercial Bank (CCB) in Canada as part of a global expansion announced earlier in 2022. CCB will deploy Citi’s portfolio of institutional products and solutions to midsize businesses as they rapidly grow and expand internationally. Citi has hired Casey Coates to lead CCB for Canada. (Looking for Alpha)

COINBASE
Former Coinbase official among 3 arrested for crypto insider fraud
The US Department of Justice has charged former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and Sameer Ramani with allegations of wire fraud and insider trading. The DOJ alleged that Ishan Wahi shared information on at least 14 different listings on Coinbase – the defendants used anonymous Ethereum wallets and exchange accounts in other people’s names to purchase at least 25 different cryptocurrencies and potentially earned around $1.1 million. (CoinDesk)

Coinbase Ensures No Exposure To Collapsed Crypto Firms
Coinbase says it “had no financial exposure” to Celsius, Three Arrows Capital and Voyager Digital – trying to allay concerns about the impact of an industry liquidity crunch on its business. Each company has filed for bankruptcy after a sharp drop in digital token prices triggered a flurry of liquidations in highly leveraged positions. Shares of Coinbase closed more than 14% higher on Wednesday. (CNBC)

GOLDMAN SACHS
Goldman Sachs overhaul sees pre-recession success

Despite trading and investment moves, the second quarter was a mix of collapsing transaction fees and strong trading revenue. While trying to strike a balance, CEO Solomon hinted at more predictable fee and interest income that received a useful hit before the recession. Its investment income halved in the second quarter, year-on-year, but at $1.8 billion it was still bigger than what JPMorgan, Morgan Stanley, Citigroup and Bank of America managed. (Reuters)

GOOGLE
The new Google Wallet has arrived
The new Google Wallet has started appearing on phones in dozens of countries – it replaces the Google Pay app (although both will be available in the US and Singapore) and will allow users to manage their payment cards, rewards cards, gift cards, as well as event tickets, IDs, and more. To date, it is deployed in 39 countries. (Finextra)

JPMORGAN CHASE
JPMorgan uses a lot of capital to go after direct lenders
JPMorgan Chase organized a unit to compete with growing direct lender competitors, committing a “significant portion of capital” to carry leveraged loans on its balance sheet. The move is a harbinger of how banks can realign their leveraged lending operations to win favor with buyers and once again secure market share for Apollo, Ares and Golub Capital. (FT)

ROBIN HOOD
Options trading on cash accounts is now available at Robinhood
Options trading on spot accounts is now available to all eligible Robinhood customers. Options trading is the trading of instruments that allows a trader to buy or sell a specific security on a future date at a set price. Options trading involves significant risk and is not appropriate for all clients, therefore all interested clients should request access to options and have their accounts reviewed to determine if they are qualified. Previously, Robinhood advanced clients could only trade stocks and ETFs. (Looking for Alpha)

VISA
Visa seeks to invest in fintech Airwallex
Visa is in talks to join an extension of the latest round of funding from cross-border payments company Airwallex. The startup is looking to raise $100 million to $150 million in an expansion of its Series E, which is $5.5 billion from the previous round. Other existing investors may also participate in the funding round (Bloomberg)


Tweets of the week

1.

Source: Teresa Dixon Murray

2.

Source: Bennett Tomlin

Charts of the week

1. Unbundling of Bank of America

Source: Brice GROCHE

2. How does card as a service work for fintechs?

Source: Nicholas Pinto

What is the trend

Wall Street Texting Habit Costs Banks $1 Billion Total Bill (Bloomberg)

Fintechs that boomed during shutdowns are hit with fears they won’t be able to weather a recession (FT)


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