In the second quarter, the investment banking business of the five major banks achieved a total revenue of 8.2 billion US dollars, a year-on-year increase of 40%. Morgan Stanley said that it is now in the early stage of investment banking business recovery.
Wall Street investment banking rebounded strongly in the second quarter, achieving the best quarterly performance in two years.
Goldman Sachs, JPMorgan, Morgan Stanley, Bank of America, and Citigroup, collectively generated $8.2 billion in investment banking revenue in the second quarter, a 40% year-on-year increase and reaching the highest level since the start of 2022.
It is worth mentioning that, except for Goldman Sachs, the investment banking revenue of the other four major banks exceeded market expectations, demonstrating a general trend of industry recovery.
Over the past three months, the stock prices of the five major banks have all outperformed the S&P 500 index. Analysts believe that this outstanding performance reflects not only the financial market's recovery but also the possibility that investment banks are entering a new growth cycle.
Significant recovery in various segments of the business and optimistic outlook for investment banking.
Specifically, different businesses have shown varying degrees of recovery:
- Debt financing: performed the most outstandingly, with the five major banks' debt underwriting revenue increasing by over 50% YoY to $3.7 billion. This is mainly due to corporate borrowers actively refinancing or adding debt in the context of stabilizing interest rates. Investors' appetite for high-risk transactions is increasing, such as Boeing, which successfully raised $10 billion at the end of April. Citigroup and Morgan Stanley performed the best in debt transactions, with revenues increasing by approximately 90% and 70% YoY, respectively.
- Underwriting business: revenue increased by 36% to $1.8 billion. South Korean online comic platform Webtoon Entertainment went public on the Nasdaq, raising $0.315 billion, becoming one of the highlights of the quarter. JPMorgan and Goldman Sachs achieved revenues of $0.495 billion and $0.425 billion, respectively, leading other competitors.
- Mergers and acquisitions consulting: revenue increased by 25% to $2.7 billion. Although the growth rate is relatively small, there are signs of increasing large-scale M&A transactions, such as ExxonMobil's $60 billion acquisition of Pioneer. Goldman Sachs' share of announced deals in the first half of 2024 increased significantly from 21% in the same period last year to 28%, with Morgan Stanley following closely behind, increasing its share from 15% to 24%.
Major investment banks have expressed an optimistic outlook for the future of investment banking businesses.
Morgan Stanley CFO Sharon Yeshaya said on Tuesday:
We expect that we are in the early stages of a recovery in investment banking, and the differences in asset valuations between buyers and sellers are narrowing.
This is consistent with Goldman Sachs' view. Goldman Sachs CEO Solomon said on a earnings call that the company's backlog of investment banking business had increased significantly this quarter and still has room for further recovery.
Morgan Stanley CEO Ted Pick's optimistic comments on the outlook for investment banking businesses helped offset the impact of the bank's mixed quarterly results on its stock price. He said:
I think we are in the early stages of a growth cycle dominated by investment banking businesses, and we are very confident in this judgement.