The Wall Street giants took advantage of the rebound in financial markets that led to a boom in brokerage, IPOs, and mergers and acquisitions.
The contrast is striking. Like other countries, the United States experienced a historic recession in 2020 following the Covid-19 pandemic, but its six major banks have amassed cumulative profits of more than $ 80 billion, fully benefiting from their global leadership in trading or merchant banking.
On Thursday, Morgan Stanley closed the ball of annual results presentations with a net profit of $ 11 billion, up 22% compared to 2019. In the fourth quarter alone, the bank even saw its profits jump by 57 %, to $ 3.27 billion.
« The company had a very good quarter and record annual results, with excellent performances in all three business segments and in the various geographies, said James Gorman, CEO of Morgan Stanley. We are entering the year 2021 with significant momentum ».
The performance of the group resonates with those of its rival Goldman Sachs and, to a lesser extent, with those of the other giants of Wall Street, which largely erased during the second part of the year the shock of the crisis and recovered part of the record provisions made in the first half of the year to cover future arrears.
In total, JPMorgan, Bank of America Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo thus recorded profits of 81.6 billion dollars in 2020. This certainly represents a decrease of 32% compared to 2019, but the triggering of the crisis and its impact on the accounts of American banks in the first half of the year raised fears of a dark year.
At the origin of the rebound: a stock market galvanized since the autumn by the prospects of exiting the crisis linked to future vaccination campaigns and the massive support of the Federal Reserve. Enough to forget the explosion of March and April and lead in its wake a boom in trading, IPOs and M & A.
Contrast with European banks
Whatever the operations, we find almost every time the stars of Wall Street as advisers. Witness, the acquisition of the British IHS Markit by S & P Global for 43 billion dollars, accompanied in particular by Morgan Stanley, Jefferies, JPMorgan, Goldman Sachs and Citi.
This domination of the big American banks, which are preparing to buy back 10 billion dollars of shares in the first quarter of 2021, continues to undermine the morale of their European competitors, to whom the European Central Bank has recommended not to distribute dividends. before September.
« The American system was able to do the right consolidation operations and the right regulations after the financial crisis, squeaks a French banker. They took the opportunity to build ultra-profitable platforms when the Europeans are still dealing with the files of the crisis, like Monte dei Paschi in Italy. »
And Wall Street continues to advance its pawns, like Morgan Stanley which got its hands on the online broker E-Trade for 13 billion dollars last year. All is not rosy, however. Citigroup saw its revenues and earnings decline in the fourth quarter and Wells Fargo was impacted by its retail banking activities.
Finally, uncertainties remain, even if the election of Joe Biden clarifies the political situation. ” We had an amazing year, Citi CFO Mark Mason warned this week. The industry has seen great growth in the markets, but at some point it needs to normalize. »