Wall Street's Biggest Investment Banks Suffer Losses

Wall Street's biggest players have had a rough start to the year. All of the biggest US banks saw profits take a hit in the first three months of 2022, ending a pandemic-era boom, Nicole Goodkind reported for CNN Business.

Photo Insert: Citi, Goldman Sachs, Morgan Stanley, and Wells Fargo all announced large year-over-year profit declines in their first-quarter earnings reports Thursday.

Citi, Goldman Sachs, Morgan Stanley, and Wells Fargo all announced large year-over-year profit declines in their first-quarter earnings reports Thursday, joining JPMorgan Chase, which announced Wednesday that its first-quarter profit fell 42%. Citi saw a drop of 46%, Goldman Sachs fell 42%, Morgan Stanley dropped 11% and Wells Fargo fell 21%.

Since 2020, banks have benefited from the longest bull run in history, record-high trade volumes, surging bank deal values, low interest rates, and big reserve releases driving profit spikes. Now, they see an end to the good times.

"It was a turbulent quarter dominated by the devastating invasion of Ukraine," Goldman Sachs CEO David Solomon said. "The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill."

Goldman earned $3.94 billion in the quarter, down from $6.84 billion a year ago. Still, earnings per share came in at $10.76, analysts had expected $8.89 per share, according to Refinitiv.

The bank, Solomon said, did well in consumer banking, wealth, and asset management, where its net revenue jumped 21% to $2.1 billion due to higher fees and credit card balances.

Citi added $1.9 billion to its reserves to prepare for losses from Russia and the Ukraine war. The bank beat estimates, bringing in $2.02 per share, compared with forecasts for $1.43 per share. Morgan Stanley beat earnings estimates and saw strong revenue from equity and fixed income.

The bank bested Goldman Sachs in merger and acquisition advisories, but business was down. Equity underwriting deal volumes fell 80% in the quarter for both Morgan Stanley and Goldman Sachs, according to Refinitiv. Wells Fargo also warned of economic headwinds on the horizon.

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