(News Bulletin 247) – While Bank of America clearly benefited in the second quarter from the Fed’s rate hikes, Morgan Stanley for its part suffered from a drop in activity on the mergers and acquisitions market.

The spring banking crisis seems a distant memory. The activity of the American bank Bank of America, the second largest bank in the United States by the size of its assets, once again benefited from the successive interest rate hikes carried out by the Fed.

Like the other major American banks, the establishment recorded a jump in its turnover in the second quarter driven by the ten key rate hikes made since March 2022. It swelled by 11% to 25.2 billion of dollars. Net profit was $7.4 billion, up 19%. Adjusted per share, it stands at $0.88.

Performances that exceed the consensus of analysts prepared by FactSet. “We achieved one of the strongest quarterly and half-yearly results in the history of the company,” said Brian Moynihan, head of Bank of America, in a press release.

“Continued organic customer growth and customer activity across all lines of business accompanied the beneficial effects of higher interest rates,” he said.

As a result, net interest income (the difference between interest earned on loans made to customers and interest paid to savers and creditors) grew 14% to $14.2 billion.

Without providing forecasts for the next few months, Brian Moynihan stressed that the group continued “to see a healthy American economy growing at a slow pace, with a resilient labor market”. Alastair Borthwick, Chief Financial Officer, agreed: “Asset quality and overall US consumer well-being remain strong.”

Confidence in the “strength” of its capital which enabled the bank to announce on Friday the payment in the third quarter of a dividend to holders of preferred shares. In the second quarter, it returned $2.3 billion to shareholders in dividends and share buybacks.

A difficult market environment for Morgan Stanley

Besides, Morgan Stanley suffered much more in the second quarter. The American investment bank Morgan Stanley published Tuesday a net profit down 14%, to 2 billion dollars, in the second quarter, due to a “difficult” context for certain consulting activities while wealth management broke records.

“The quarter began with macroeconomic uncertainties and subdued customer activity but ended on a more constructive note,” Morgan Stanley chief James Gorman said in a statement. The establishment finished it “with a solid capital position”, he supported. “We remain confident in our ability to grow in different market environments, while maintaining a strong capital position,” he added.

The bank’s turnover increased by 2% over one year to 13.46 billion dollars, marked by a record in the wealth management branch where the net amount of new assets deposited by customers reached 90 billion dollars. dollars. But, like the first quarter, Morgan Stanley suffered from a lack of activity in the mergers and acquisitions sector.

The investments branch, which essentially includes asset management, also lost ground in the wake of the decline in asset values ​​compared to the same period in 2022 and the “cumulative effect of withdrawals”.

In this context, Morgan Stanley bought back $1 billion in treasury shares over the quarter, or just over a third of the envelope used a year earlier. A new buyback program was authorized for $20 billion, with no expiry date.

The second quarter was also marked by an exceptional charge of $308 million for layoffs and integration expenses of $99 million. The bank, however, had more than 82,000 employees at the end of June, compared to around 78,400 a year earlier.

On Wall Street, Bank of America rose 3.6% to 30.46 dollars while Morgan Stanley won 4.2% to 90.20 dollars in early trading.

(With AFP)