Moody’s Reports Strong Q3 for Wall Street Banks as Capital Markets Fuel Growth

Major U.S. investment banks posted robust third-quarter earnings, according to a recent report from Moody’s Ratings, as healthy capital markets and steady net interest income drove results across Wall Street.

Moody’s said that large U.S.-based global banks — including Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo — all reported improved performance fueled by strong capital-markets and wealth-management revenues, stable asset quality, and favorable consumer credit conditions.

“Each institution generated solid profit growth,” Moody’s noted.

Banks benefited from vibrant markets that lifted asset-based fees and revenues from investment banking and trading activities. Goldman Sachs and Morgan Stanley led the pack given their close ties to capital-markets activity.

“Advisory, underwriting and trading volumes were all robust in the third quarter, fueling strong capital-markets income for each bank,” the report stated.

Commercial banking net interest income also rose during the quarter, as loan growth continued despite economic headwinds. “Rising lending activity again demonstrates the banks’ capacity to navigate a challenging environment,” Moody’s said.

Despite a cloudier economic outlook, asset quality remained broadly steady. Early-stage delinquencies in consumer loan portfolios were benign, and most commercial credit issues were bank-specific rather than systemic. Liquidity management remained “a key credit strength,” the agency added.

However, Moody’s warned that bank capital ratios could trend lower as regulatory requirements ease — a development the agency deems credit-negative. “We expect capital ratios to decline over the medium term, though management teams are likely to wait for clarity on pending rule changes before reducing buffers significantly,” the report concluded.