US investment banks post strong Q3 profit increase

  • Business
  • Thursday, 25 Sep 2003

NEW YORK: US investment banks Morgan Stanley and Lehman Brothers Holdings Inc have reported third-quarter profits that were more than double those a year ago, while earnings at rival Goldman Sachs Group Inc increased more modestly as revenue from bond trading fell sharply. 

Lehman and Morgan Stanley said their revenue from trading bonds had increased from a year earlier as both banks weathered a spike in US Treasury yields that flipped the bond markets in July. 

On the other hand, Goldman's revenue from fixed income, commodity and currency trades plunged by 37% from a year earlier as the firm took losses from positions in mortgage-backed securities and currencies.  

Its earnings, though, were buoyed by a rebound in the value of its stake in Japan's Sumitomo Mitsui Financial Group. 

Lehman's third-quarter earnings surged nearly 150% to US$480mil as demand for fixed income securities remained strong and investment banking picked up. 

Morgan Stanley said its third-quarter profit had also more than doubled, bolstered by US$320mil from a one-time benefit from changes in how it accounts for stock option awards.  

It’s net income for the quarter was US$1.27bil, compared with US$611mil in the same period a year earlier. 

Goldman’s third-quarter earnings came in at US$677mil, an increase of 32% from a year ago.  

The firm said its revenue from trading bonds and other fixed-income securities, currencies and commodities fell 48% from the second quarter. 

Net revenue from principal investments, including its stake in Sumitomo Mitsui Financial Group and other merchant banking investments, came to US$346mil, against a US$100mil loss in the same period last year. – Reuters  

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