Chillin' out till it needs to be funded
As expected by the markets, Revenues dipped nearly 15% year on year , though the impact is still largely from Trading Income in Bonds and the ongoing Taper /no Taper in Rates and FX as the sloughing off commodities produced nary a whimper on the top or bottomline. The topline nevertheless s substantially 30% below its $10 Bln per quarter the bank must hope for or the $8 Bln considered par for the third quarter this year. RoE is still in double digits at 10.4% while mortgage book biggies scratch 6% levels and buybacks are $4.77 Bln till date in 2013. Basel 3 Capital is still under 10% the bank though aheaad on managing RWA than others, pretty much scheduling the risk reduction without illiquid assets locking the exits.
Excess Liquidity was back at a 10% rise from the $160 levels last quarter after much a harrowing tale for the year before that. The bank continues to talk about Mortgage Technology ramping up thru ex CFO David Viniar, now a Director and diversification into Wealth banking and insurance (sold off ) to bat regulators and media attention but has more or less stabilised earnings and comp to the Wall street norms. The only real Wall Street Bank now in play in the big Four, its Fee and Advisory income show a 25% deterioration on linked quarter but are still substantial for a Top three bank rank at $1.17 Bln and Underwriting dried up but still higher 13% on September 2012 to $743 mln and it boasts of a better pipeline in Investment Banking Fees this year
Trading revenues were a third lower for the Wall Street numero uno at $2.86 Bln and was also a third down from June
FICC revenues of $1.25 Bln were down 44% led by lower volumes in mortgages, rates and currencies. Credit products’ revenue also declined but Commodities revenues were up. The firm sold its reinsurance business and blamed that slough off for the lower equities revenue
Investment Management Revenues were stable at $1.25 Bln while the firm as expected made up esp on the bottomline thru Investing and Lending revenues including a sale of $938 mln in equities that also counted its Private Equity sales, while $300 mln came from Debt securities gains and interest and $237 mln from other consolidated investments (aka CIO’s office)
The analyst and presser is in about 90 minutes. Compensation was lower by a third based on the revenue fall as the Comp ratio remained 41% and the bank also managed to decrease other Operating expenses by just under 10% this quarter over September 2012. Also its Non Comp expenses were lower by 4% on the super efficient Q2
The rally in bank stocks likely begins after MS reports tomorrow as the Taper gets pushed to 2014 and the new debt compromise confirms that there will be more such ignorable rumpus on the debt ceiling every six months