Goldman, Morgan Stanley to shine amid
struggle for large-cap banks - HSBC
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[September 07, 2023]
By Aniruddha Ghosh
(Reuters) - Goldman Sachs and Morgan Stanley are poised for stronger
results next year compared to other large-cap U.S. banks as dealmaking
on Wall Street picks up and asset management businesses gain momentum,
HSBC said on Thursday.
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The logo for Goldman Sachs is seen on the trading floor at the New York
Stock Exchange (NYSE) in New York City, New York, U.S., November 17,
2021. REUTERS/Andrew Kelly/File Photo |
The
brokerage said that Goldman Sachs and Morgan Stanley should post
high single-digit to low double-digit revenue growth in 2024 and
sizable earnings growth in 2024 and 2025 after being weighted
from a decade-long low in investment banking.
Lead analyst Saul Martinez believes a "bifurcation" is emerging
in revenue forecast between traditional and capital
markets-focused banks and picks Goldman Sachs as the brokerage's
preferred name in its coverage.
"We see deal activity picking up: even in a sluggish economic
growth environment, greater visibility regarding the direction
of economic growth, interest rates, and inflation should trigger
more equity and debt issuance and M&A activity," Martinez said.
He added that fixed income and equity sales and trading revenues
have been lower than the heights they reached in 2020-2022 but
they have been resilient and remain above 2017-2019 levels.
Investment banks have been hit by a plunge in dealmaking
activity as torrid markets and aggressive rate hikes by the
Federal Reserve have forced lenders to pull back from financing
large deals.
Although rising interest rates have helped Bank of America,
JPMorgan Chase and Wells Fargo in reaping windfalls from
charging clients higher interest rates, they have started to
stagnate loan growth, putting pressure on higher deposit costs.
HSBC expects JPMorgan, Bank of America and Wells Fargo to see
net interest income decline along with higher credit costs but
said Bank of America will fare better.
(Reporting by Aniruddha Ghosh in Bengaluru; Editing by Maju
Samuel)
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