Financial Biz Cheat Sheet: Bank of America and Goldman Sachs Dominate

Bank of America’s (NYSE:BAC) third quarter better than expected earnings of $0.56 per share came from three areas. Almost half, $0.25, was from the sale of China Construction Bank with the balance coming from debt valuation adjustment ($0.12), and reserve release (0$0.12). The bank’s core earnings weren’t that much higher than zero.

Goldman Sachs (NYSE:GS) third quarter losses included a number of declines. Its ibanking revenue dropped 33 percent year over year with help from its 61 percent underwriting decline. Investing and lending contributed a negative net revenue of $2.48B and the company’s compensation fell 59 percent. Where has Goldman Sach’s money gone in the last few quarters? Prop trading has been a good source with of $1-$3 billion in profits; however, it followed the company’s overall third quarter decline with a $2.5 billion loss from the company’s investment and trading volume decline.

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Bank lending isn’t dead says Wells Fargo (NYSE:WFC) CFO Timothy Sloan. In an interview, Sloan said that “The narrative that banks aren’t lending is incorrect. Lending is strong, and based on what we’re seeing,  it will continue to grow.” In the third quarter, Citigroup (NYSE:C), Wells Fargo and JPMorgan Chase (NYSE:JPM) saw loan growth in almost all of their businesses; however, Bank of America (NYSE:BAC) reported a 1 percent in loan declines.

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Morgan Stanley (NYSE:MS) continues to struggles with bond position missteps. After overhauling its bond hedges from a large exposure to bond-insurance companies, the firm saw a $471 million gain in the second quarter; however, it may continue to haunt them. Analysts have predicted a $200 million loss from the positions will show up when the Morgan Stanley reports their third quarter earnings on Wednesday.

S&P downgraded a number of Italian banks (NYSE:KBE) due to deteriorating conditions. The rating agency cut 24 of 43 banks and said that it did not believe “that this difficult operating environment is transitory or that it will be easily reversed.”

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