Morgan Stanley, BofA and Well Fargo expected to deliver

Brian Moynihan Smile

An upside surprise ?

Bloomberg News reports that Morgan Stanley, Bank of America and Wells Fargo are poised to lead the six largest U.S. banks by reporting a jump in earnings that may surprise some investors fixated on a slump in trading and mortgage lending.

The three banks probably will post combined third-quarter profit of $8.64bn, or 14% more than a year earlier, according to analysts’ estimates compiled by Bloomberg. JPMorgan Chase, Citigroup and Goldman Sachs will report a 7.8% drop, the estimates show. Five of the six firms may have squeezed more profit from each dollar of revenue as they benefited from expense cuts and a stronger U.S. economy.

'I see companies that are improving their profitability', said David Hilder, an analyst at Drexel Hamilton LLC in New York who recommends buying stock in five of the banks including Morgan Stanley. Investors may be caught off guard 'if individual analysts or the market have been too focused on lower fixed-income trading revenue or mortgage refinancing revenue'.

Hit the link below to access the complete Bloomberg article:

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