When looking at the distribution of revenues, unsurprisingly, Goldman Sachs and Morgan Stanley have the highest proportion of trading income as a percentage of total operating income. But the benefits of Morgan Stanley’s purchase of a majority stake (soon to be a full buyout) of Citi’s retail brokerage Smith Barney are immediately clear. Fee and commission income for the bank topped 55%, whereas trading retains its lead in the Goldman revenue breakdown. While Goldman’s net profit was down 35%, Morgan Stanley’s rose fivefold, although one-off items such as the sale of its stake in China International Capital Corporation also played a part.
Citigroup is the only bank with more than 50% of its revenue deriving from interest income, and had to allocate close to 30% of its operating income as impairment and provisions, most probably deriving from growing non-performing loans on its $680bn loan book. BAML also suffered high impairment costs and their ‘on-balance-sheet’ loan book now amounts to close to $1,000bn.
JP Morgan increased its profits 53% and made the largest pre-tax profit in its history according to theBankerDatabase.com, at $24.8bn. It remains a balance sheet machine, with 50% of its revenues generated by interest income – exceeded only by Citigroup.