After pulling in their biggest haul in three years last quarter, bank profits have hit a wall in the first two weeks of September, The Financial Times reports.
Analysts have revised down their predictions for bank profits in the third quarter, as trading activity this month has been lackluster. According to data from Bloomberg, as reported by the Financial Times, average earnings estimates for Goldman Sachs and Morgan Stanley have each dropped two cents a share since the beginning of September. With trading slow in both stocks and bonds, the FT notes, analysts think the big banks will fall short of last year's relatively cheery numbers.
Analyst Richard Staite said in a letter to clients that Goldman's revenue would total $4.2 billion for fixed-income trading (a four percent drop from last quarter) and $1.6 billion for equity trading (a 32 percent rise over last quarter). During this period last year, according to Reuters analysis reported by the New York Times, Goldman pulled in $12.37 billion in revenue, or $3.19 billion in profit.
HuffPost's Shahien Nasiripour reported last month that bank profits in the second quarter of this year jumped 21 percent from the previous quarter, as banks paid the least in perhaps 50 years to borrow money. Even in that climate, though, Goldman's own profits dropped 82 percent from the previous year, Businessweek said.
It wasn't supposed to be this way. Fingers were crossed at the start of the month, as Bloomberg reported that September activity needed to be "off the charts" to redeem a disappointing July and August. Initially, it looked like a rebound might be in the cards, as the S&P 500 rose last week. The Wall Street Journal even dared to ask this Wednesday, "What's a September skeptic to do?"
The answer, it now seems, is gloat.