Finance

Morgan Stanley topped analysts’ estimates for third-quarter profit as each of its three main divisions generated more revenue than expected.
The bank said profit rose 32% to $3.2 billion, or $1.88 per share, and revenue jumped 16% to $15.38 billion.

Morgan Stanley on Wednesday topped analysts’ estimates for third-quarter profit as each of its three main divisions generated more revenue than expected.
Here’s what the company reported:

Earnings:$1.88 a share vs $1.58 LSEG estimate
Revenue: $15.38 billion vs. $14.41 billion estimate

The bank said profit rose 32% to $3.2 billion, or $1.88 per share, and revenue jumped 16% to $15.38 billion.
Morgan Stanley had several tail winds in its favor, starting with buoyant markets that helped its massive wealth management business, a rebound in investment banking after a dismal 2023, and strong trading activity. The Federal Reserve began taking down rates in the quarter, which should encourage more of the financing and merger activity that Wall Street firms capitalize on.
“The firm reported a strong third quarter in a constructive environment across our global footprint,” Morgan Stanley CEO Ted Pick said in the release.
Shares of the bank advanced 3.6% in premarket trading.
The bank’s wealth management division saw revenue jump 14% from a year earlier to $7.27 billion, exceeding the StreetAccount estimate by nearly $400 million.

Equity trading revenue rose 21% to $3.05 billion, compared with the $2.77 billion estimate, while fixed income revenue edged 3% higher to $2 billion, also higher than the $1.85 billion estimate.
Investment banking revenue surged 56% from a year earlier to $1.46 billion, exceeding the $1.36 billion estimate.
Investment management, the firm’s smallest division, also exceeded expectations, posting a 9% increase in revenue to $1.46 billion, modestly higher than the $1.42 billion estimate.
Morgan Stanley’s Wall Street rivals also posted better-than-expected Wall Street revenue. JPMorgan Chase, Goldman Sachs and Citigroup topped estimates on strong revenue from trading and investment banking.
This story is developing. Please check back for updates. More

Chinese e-commerce giant Alibaba’s international arm launched an updated version of its artificial intelligence-powered translation tool that, it says, is better than products offered by Google, DeepL and ChatGPT.
The product supports 15 languages: Arabic, Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Turkish and Ukrainian.
“The idea is that we want this AI tool to help the bottom line of the merchants, because if the merchants are doing well, the platform will be doing well,” Kaifu Zhang, vice president of Alibaba International Digital Commerce Group and head of the business’ artificial intelligence initiative, told CNBC.

Chinese e-commerce company Alibaba has invested heavily in its fast-growing international business as growth slows for its China-focused Taobao and Tmall business.
Nurphoto | Nurphoto | Getty Images

BEIJING — Chinese e-commerce giant Alibaba’s international arm on Wednesday launched an updated version of its artificial intelligence-powered translation tool that, it says, is better than products offered by Google, DeepL and ChatGPT.
That’s based on an assessment of Alibaba International’s new model, Marco MT, by translation benchmark framework Flores, the Chinese company said.

Alibaba’s fast-growing international unit released the AI translation product as an update to one unveiled about a year ago, which it says already has 500,000 merchant users. Sellers based in one country can use the translation tool to create product pages in the language of the target market.
The new version is based only on large language models, allowing it to draw on contextual clues such as culture or industry-specific terms, Kaifu Zhang, vice president of Alibaba International Digital Commerce Group and head of the business’ artificial intelligence initiative, told CNBC in an interview Tuesday.
“The idea is that we want this AI tool to help the bottom line of the merchants, because if the merchants are doing well, the platform will be doing well,” he said.
Large language models power artificial intelligence applications such as OpenAI’s ChatGPT, which can also translate text. The models, trained on massive amounts of data, can generate humanlike responses to user prompts.
Alibaba’s translation tool is based on its own model called Qwen. The product supports 15 languages: Arabic, Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Turkish and Ukrainian.

Zhang said he expects “substantial demand” for the tool from Europe and the Americas. He also expects emerging markets to be a significant area of use.
When users of Alibaba.com — a site for suppliers to sell to businesses — are categorized by country, developing countries account for about half of the top 20 active AI tool users, Zhang said.
Chinese companies have increasingly looked abroad for growth opportunities, especially e-commerce merchants. PDD Holdings’ Temu, fast fashion seller Shein and ByteDance’s TikTok are among the recent global market entrants. Many China-based merchants also sell on Amazon.com.

Contextual clues

Since Alibaba launched the first version of its AI translation tool last fall, the company said merchants have used it for more than 100 million product listings. Similar to other AI-based services, the basic pricing charges merchants by the amount of translated text.
Zhang declined to share how much the updated version would cost. He said it was included in some service bundles for merchants wanting simple exposure to overseas users.
His thinking is that contextual translation makes it much more likely that consumers decide to buy. He shared an example in which a colloquial Chinese description for a slipper would have turned off English-speaking consumers if it was only translated literally, without getting at the implied meaning.
“The updated translation engine is going to make Double 11 a better experience for consumers because of more authentic expression,” Zhang said, in reference to the Alibaba-led shopping festival that centers on Nov. 11 each year.
Alibaba’s international business includes platforms such as AliExpress and Lazada, which primarily targets Southeast Asia. The international unit reported sales growth of 32% to $4.03 billion in the quarter ended June from a year ago.
That’s in contrast to a 1% year-on-year drop in sales to $15.6 billion for Alibaba’s main Taobao and Tmall e-commerce business, which has focused on China.
The Taobao app is also popular with consumers in Singapore. In September, the app launched an AI-powered English version for users in the country.
Nomura analysts expect that Alibaba’s international revenue slowed slightly to 29% year-on-year growth in the quarter ended September, while operating losses narrowed, according to an Oct. 10 report. Alibaba has yet to announce when it will release quarterly earnings. More

It was with Teutonic understatement that Robert Habeck noted economic conditions were “not satisfactory”. Germany’s economy minister was speaking on October 9th, just after official forecasts for the year had been revised from growth of 0.3% to a contraction of 0.2%. This would follow a 0.3% decline in output last year, meaning that Germany faces its first two-year recession in more than two decades. More

Goldman Sachs topped estimates for third-quarter profit and revenue on strong results from its stock trading and investment banking operations.
Equities trading posted an 18% revenue increase to $3.5 billion, more than half a billion dollars higher than the $2.96 billion estimate from StreetAccount.
Investment banking revenue jumped 20% to $1.87 billion, on strength in debt and equity underwriting,

David Solomon, Chairman & CEO Goldman Sachs, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 17th, 2024.
Adam Galici | CNBC

Goldman Sachs topped estimates for third-quarter profit and revenue on strong results from its stock trading and investment banking operations.
Here’s what the company reported:

Earnings: $8.40 per share vs. $6.89 LSEG estimate
Revenue: $12.70 billion vs. $11.8 billion estimate

The bank said profit surged 45% from a year earlier to $2.99 billion, or $8.40 per share, as revenue climbed 7% to $12.7 billion.
Goldman shares rose 2.8% in premarket trading.
Over the past two years, the Federal Reserve’s tightening campaign has made for a less-than-ideal environment for investment banks like Goldman. Now that the Fed is easing its benchmark rate, Goldman is positioned to benefit as corporations that have waited on the sidelines to acquire competitors or raise funds begin to take action, and rising values bolsters its asset and wealth management business.
CEO David Solomon cited an “improving operating environment” as he touted his firm’s results on Tuesday.
Equities trading was the outlier this quarter, posting an 18% revenue increase to $3.5 billion, more than half a billion dollars higher than the $2.96 billion estimate from StreetAccount. The company cited strong results in both derivatives and cash trading.

Fixed income trading revenue slipped 12% from a year earlier to $2.96 billion, just above the $2.91 billion StreetAccount estimate, on a slowdown in interest rate products and commodities.
Investment banking revenue jumped 20% to $1.87 billion, topping the $1.62 billion estimate, on strength in debt and equity underwriting, and the bank said its backlog for pending deals increased from both a year earlier and the second quarter.
The firm’s asset and wealth management division also helped it top expectations; revenue there jumped 16% to $3.75 billion, exceeding the $3.58 billion estimate from StreetAccount on rising management fees and gains in investments.
Last week, rival JPMorgan Chase set expectations high with better-than-anticipated results from trading and investment banking, factors that helped the bank top earnings estimates.
Wells Fargo also exceeded estimates on Friday on the back of its investment banking division.
This story is developing. Please check back for updates. More

The Citibank building in Canada Square at the heart of Canary Wharf financial district in London on May 7, 2024.
Mike Kemp | In Pictures | Getty Images

Citigroup reported third-quarter results Tuesday that topped Wall Street expectations, with growth in investment banking and wealth management. However, the bank set aside more money to offset potential loan losses.
Shares of the bank were up 2% in premarket trading Tuesday.

Here’s what the company reported compared with what Wall Street analysts surveyed by LSEG were expecting:

Earnings per share: $1.51 vs. $1.31 expected
Revenue: $20.32 billion vs. $19.84 billion expected

Citigroup’s banking division reported 18% gain in revenue year over year, led by a 31% gain in its investment banking arm. Wealth revenue rose 9%.
Net income fell to $3.2 billion, or $1.51 per share, from $3.5 billion, or $1.63 per share, a year earlier. Earnings were hurt by a higher cost of credit, including a net build of $315 million in Citi’s allowance for credit losses.
Revenue rose 1% to $20.32 billion from $20.14 billion a year ago.
On the markets side, equity markets revenue rose 32% year over year, but fixed income revenue dipped 6%.

Citigroup CEO Jane Fraser took over in March 2021 and has focused on slimming down the bank during her tenure. That includes reducing Citigroup’s global presence and laying off workers. Investors will be looking for updates on Fraser’s turnaround plan during the analyst call later Tuesday morning.
“This quarter contains multiple proof points that we are moving in the right direction and that our strategy is gaining traction, including positive operating leverage for each of our businesses, share gains and fee growth,” Fraser said in the earnings release.
The CEO also said that the bank was on track to hit its full-year targets for expenses and revenue.
Shares of Citigroup were up more than 28% year to date through Monday, outperforming both the S&P 500 and the financial sector.
The other major banks that have reported third-quarter results so far have also beaten earnings expectations, including Goldman Sachs and JPMorgan Chase.

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Bank of America topped analyst estimates for third-quarter profit and revenue on better-than-expected trading results.
The bank said Tuesday that net income fell 12% from a year earlier to $6.9 billion, or 81 cents a share, on higher provisions for loan losses and rising expenses.
Net interest income fell 2.9% to $14.1 billion, edging out the $14.06 billion estimate.

Brian Moynihan, CEO of Bank of America
Heidi Gutman | CNBC

Bank of America topped analyst estimates for third-quarter profit and revenue on better-than-expected trading results.
Here’s what the company reported:

Earnings: 81 cents vs. 77 cents LSEG estimate
Revenue: $25.49 billion vs. $25.3 billion estimate

The bank said Tuesday that net income fell 12% from a year earlier to $6.9 billion, or 81 cents a share, on higher provisions for loan losses and rising expenses.
Revenue rose less than 1% to $25.49 billion as gains in trading revenue, asset management and investment banking fees offset a decline in net interest income.
Shares of the bank climbed 2.5% in premarket trading.
Bank of America, run by CEO Brian Moynihan since 2010, demonstrated the advantages of having a massive and diversified financial institution. Analysts have focused on the bank’s core activity of taking in deposits and lending to consumers and corporations as rising rates have squeezed the firm’s haul from interest income.
But the quarter showed that the bank also benefits from surging activity on Wall Street through its trading and advisory operations, just as rivals JPMorgan Chase and Goldman Sachs did.

Fixed income trading revenue rose 8% to $2.9 billion, topping the $2.74 billion StreetAccount estimate, on strength in currencies and interest rate activity. Equities trading jumped 18% to $2 billion, topping the $1.81 billion StreetAccount estimate, on higher cash and derivative volumes.
Investment banking fees also surged 18% to $1.40 billion, topping the $1.27 billion estimate from StreetAccount.
While net interest income fell 2.9% from a year earlier to $14.1 billion, that edged out the $14.06 billion StreetAccount estimate.
That NII figure in the third quarter was higher than in the second quarter, a sign that the trajectory for this key metric is improving. The lender said in July that a rebound in net interest income was coming in the second half of the year.
Bank of America “seems to be turning the corner on NII inflection,” though the degree is dependent on interest rates from here on out, Wells Fargo analyst Mike Mayo said Tuesday in a note.
NII, which is one of the key ways that banks make money, is the difference between what a bank earns on loans and investments and what it pays depositors for their savings.
The bank’s provision for credit losses in the quarter of $1.5 billion was slightly under the $1.57 billion estimate.
JPMorgan Chase and Wells Fargo on Friday posted earnings that topped estimates, helped by their investment banking operations. Goldman Sachs and Citigroup also reported results Tuesday, while Morgan Stanley will disclose earnings Wednesday.
This story is developing. Please check back for updates. More

The Dutch government on Tuesday said it will reduce its stake in lender ABN Amro by a quarter to 30% through a trading plan.
Governments have been capitalizing on a rebound in shares to sell their shareholdings in banks that were taken over during the financial crisis.

Jasper Juinen | Bloomberg | Getty Images

The Dutch government on Tuesday said it will reduce its stake in lender ABN Amro by a quarter to 30% through a trading plan.
Shares of the Dutch bank traded 1.2% lower at the market open and was last down 0.6% as of 9:15 a.m. London time.

The Dutch government, which currently holds a 40.5% interest in ABN Amro, announced via its investment vehicle firm NLFI that it will sell shares using a pre-arranged trading plan set to be executed by Barclays Bank Ireland.
In September, the government had said it sold shares worth about 1.17 billion euros, bringing its shareholding under 50%. It used part of the proceeds to pay off some of the state’s debts.
ABN Amro was bailed out by the state during the 2008 financial crisis and later privatized in 2015. The government started reducing its shareholding in the firm last year.
The lender came into state ownership “to ensure the stability of the financial system and not as an investment to make a return,” the Finance Minister Eelco Heinen said in a letter to parliament, reiterating previous statements on the government’s intentions.
In order to recoup what the government’s total expenditure, the entire remaining stake would have to be sold at a price of 31.49 euros per share, Heinen said in September, adding that it is “not realistic” that such a price will be achieved in the short term.

As of the Monday close, ABN Amro’s share price was 15.83 euros.

Rebound in shares

The banking sector has been in the spotlight of late, after UniCredit’s move to take a stake in German lender Commerzbank sparked questions on cross-border mergers in Europe and the lack of a complete banking union in the region.
Governments have been capitalizing on a rebound in shares to sell their shareholdings in banks that were taken over during the financial crisis. The U.K. and German administrations have both made moves this year to reduce their respective shareholdings in NatWest and Commerzbank.
ABN Amro was the subject of acquisition speculation last year, when media reports claimed French bank BNP Paribas was interested in the Dutch lender. At the time, BNP Paribas denied the reports. More

Federal Reserve Governor Christopher Waller on Monday signaled that future interest rate cuts will be less aggressive than the big move in September.
“Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year,” he said.
Key data points for the Fed have been mixed in recent days.

Christopher Waller, a member of the Federal Reserve Board of Governors, during a Fed Listens event in Washington, D.C., on Sept. 23, 2022.
Al Drago | Bloomberg | Getty Images

Federal Reserve Governor Christopher Waller on Monday signaled that future interest rate cuts will be less aggressive than the big move in September as he expressed concern that the economy could still be running at a hotter-than-desired pace.
Citing recent reports on employment, inflation, gross domestic product and income, the policymaker indicated that “the data is signaling that the economy may not be slowing as much as desired.”

“While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said in prepared remarks for a conference at Stanford University.
The Federal Open Market Committee at its September meeting took the unusual step of lowering its baseline interest rate by a half percentage point, or 50 basis points, to a target range of 4.75% to 5.00%. In the past, the Fed has only done that during times of crisis, as it prefers to move in increments of a quarter percentage point, or 25 basis points.
Along with the cut, officials indicated the likelihood of another half point lopped off in the final two meetings of 2024, along with another full percentage point of cuts in 2025. However, Waller did not commit to a specific path ahead.
“Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year,” he said.
Key data points for the Fed have been mixed in recent days. The labor market posted stronger numbers in September after weakening through the summer, the consumer price index inflation gauge was slightly higher than expected and GDP also has held strong.

In the final revision for second-quarter growth, the Commerce Department also punched up the level of gross domestic income gain to 3.4%, an adjustment of 2.1 percentage points from the previous estimate and closer in line with GDP. The savings rate also was adjusted much higher, to 5.2%.
“These revisions suggest that the economy is much stronger than previously thought, with little indication of a major slowdown in economic activity,” Waller said.

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