Goldman leads race in record run for equities tradingTop US banks smashed through another plateau for equities trading last quarter, with four of the five biggest institutions reporting record revenues in the business. While bank analysts keep predicting the extraordinary run for equities trading has topped out, banks continue to find room to outperform. The extreme volatility unleashed by the upending of US trade relations has also set the stage for another strong quarter. Across the big five of Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America and Citigroup, revenue from equity trading hit US$15.8bn in aggregate in the January-March quarter, up 34% from a year earlier. “We obviously saw significant moves in equity markets as people positioned for a different kind of trade policy during March,” Goldman chief executive David Solomon told analysts. “And we saw significant moves in the March period which actually led to higher activity for us in a variety of ways. We're early in the [second] quarter but so far, the business is performing very well and clients are very active,” he said. Goldman, Morgan Stanley, JP Morgan and BofA all reported record first-quarter equities revenue. Goldman remained top dog. Its revenue from equities trading in January–March was US$4.19bn, up 27% from a year earlier and above expectations. That kept it just ahead of Morgan Stanley, which posted revenue of US$4.13bn, up 45%. Goldman's revenue from equities intermediation rose 28% to US$2.55bn, primarily due to significantly higher revenues in derivatives. Its equities financing revenue rose 24% to a record US$1.65bn, thanks to higher net revenues in portfolio financing and record average prime balances for the quarter, the bank said. “This quarter was characterised by rapidly shifting sentiment, with the market backdrop ending in a very different place than where it started,” Solomon said, with ongoing policy uncertainty and market volatility driving many clients to reposition their portfolios, resulting in increased trading activity. Morgan Stanley's bigger jump in equity trading revenue was across products and regions, particularly Asia, with strength in prime brokerage and derivatives, the bank said. JP Morgan reported a 48% jump in equity trading revenue to US$3.81bn, keeping the top three well ahead of the pack. BofA's revenue from equity trading hit US$2.19bn, up 17% from a year earlier, as it tries to keep pace with the leaders. “We'll keep closing the gaps,” said chief executive Brian Moynihan. “In the given quarter, people may shoot up higher because of this element or that element. Our job is to be consistent across all of the elements we participate in and keep driving that.” Citi's revenue from equity trading rose 23% to US$1.5bn on the back of equity derivatives and momentum in prime services. Prime balances were up about 16%, the bank said. "Opportunity ahead" Revenues from fixed-income, currency and commodities trading also benefited from the volatility, and across the five banks hit US$20.8bn, up 6% from the hefty tally in the first quarter of 2024. JP Morgan led the pack with FICC revenue rising 8% to US$5.85bn. Citi's FICC revenues rose 8% to US$4.48bn, Goldman's rose 2% to US$4.4bn, BofA's increased 4.7% to US$3.46bn and at Morgan Stanley FICC revenues were up 4.8% to US$2.6bn. BofA has previously been dinged for missing windfalls in trading because it was seen as too risk adverse. Moynihan on the bank's earnings call pushed back against that assessment. “It's not for lack of capital or lack of risk-taking,” Moynihan said. “There's plenty of opportunity ahead ... Expect us to keep gaining share.” Total trading revenue rose 16% in aggregate across the top five banks, making up for a muted performance for investment banking fees as M&A and IPO activity remained sluggish. (See People & Markets section)
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