Well, it's a big week for investment banks this week. Goldman Sachs and Lehman Brothers kick-off the fourth-quarter earnings round Tuesday, and Bear Stearns posts on Thursday. And staff all over the financial markets will be looking closely at the numbers, as strong figures from these firms will surely ensure that bonuses payments generally will be up on last year.
And the fourth-quarter is likely to be a good one, with strong performances across the board. November was a good month for equities, and fixed income trading remained strong throughout the three month period. Revenues from M&A were consistently good in the US and Europe in the quarter.
Morgan Stanley usually posts the same week as Bear, Goldman and Lehman, but this time out it has moved back revealing its quarterly numbers until December 20th. Some speculate that this was done as Morgan Stanley's earnings will not shine as brightly as the rest, but others say that it's time the firm put in a strong quarter - and that time might be now! The four firms, in total, are thought likely to rake in Q4 profits of around $4bn. On average, earnings at the four firms are expected to rise around 20% on the same period 12 months ago.
The smart money is one another storming quarter from Goldman, with analysts expecting a 46% profit gain. Lehman is expected to come in up around 34% on last year, and Bear 8%. The jury remains out on Morgan Stanley.
According to the Securities Industry Association, the 500 companies which make up the US securities industry are likely to post total profits this year of around $23.7bn, making 2005 one of the best years ever.
Finally, Bear Stearns and Lehman Brothers (again) last week joined the $100 club. The two firms are among 24 US stocks which have reached the $100-per-share mark since August 2004.
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