Wall Street's biggest banks are beating investment-banking revenue estimates

By Steve Gelsi

Jefferies analysts chart 13% investment banking revenue growth for Bank of America, Citi, JPMorgan, Morgan Stanley and Goldman Sachs, ahead of 10% consensus view

A surge in equity capital markets and debt market activity is boosting investment banking revenue growth at the big five Wall Street banks past analyst estimates for the first quarter, analysts at Jefferies said Thursday.

Bank of America Corp. (BAC) is leading among the top banks with total investment banking revenue up more than 25% in the first quarter, compared with the year-ago period, followed by a 15% jump for JPMorgan Chase (JPM), 10% for Citigroup Inc. (C), about 7% for Morgan Stanley (MS) and 3% for Goldman Sachs Group Inc. (GS).

Stocks in all but one of the five banks rose on Thursday as the broad market moved up on the latest inflation data. JPMorgan Chase and Morgan Stanley rose 0.4%, Citigroup moved up by 0.6%, Bank of America rose 1.3% and Goldman Sachs dipped by 0.3%.

With one month left in the first quarter, collectively, the five banks are on track to deliver 13% revenue growth over the year-ago period, ahead of the 10% consensus analyst estimate, Jefferies said.

M&A advisory revenue remains a soft spot, with an 18% drop over last year.

Equity capital markets revenue is up 39% as companies issue stock, despite weakness in initial public offerings so far this year.

"The IPO market has been slower to rebound," analysts said.

Debt capital markets revenue is up 42% over the year-ago period, while also jumping by 81% from the fourth quarter.

Citigroup has been the leader on this front, with a 113% jump over the previous quarter, while the other four banks "are up decently," Jefferies analysts said.

Analysts cited a record amount of investment-grade debt issuance and "normal seasonal patterns."

Trading revenue remains mixed, with strength in fixed income potentially offset by "muted volatility" across other products.

Bank of America's stock is up by 1.2% so far in 2024, while Citigroup has gained 7%, JPMorgan Chase has risen by 8.4%, Morgan Stanley is down by 7.7%, and Goldman Sachs has risen by 1.9%.

The Dow Jones Industrial Average DJIA is up by 3.3% so far in 2024 and the S&P 500 SPX is up by 6.3%.

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-Steve Gelsi

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02-29-24 1010ET

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