Forget the Masters of the Universe. For Wall Street’s biggest banks, it’s all about mum and dad for the next 12 months – and possibly longer. The first flush of September-quarter earnings results from America’s biggest banks neatly tells the story of how rising interest rates are helping and hurting the biggest names on Wall Street., earnings from deal-making plunged 37 per cent in the September quarter versus the previous year, as investment banking revenue dropped 47 per cent.
These declines need to be seen in context. Last year saw a deal-making boom the likes of which Wall Street has never experienced. M) and corporate clients tapped debt markets to lock in emergency-level interest rates. “You’ve got to take into account the rate of growth we’ve had in the last few years,” he said. “We’ve learnt some things during COVID about how we can operate more efficiently. So that’s something the management team is working on between now and the end of the year.”
The US banks are enjoying the same consumer banking tailwinds as Australian banks. Interest rates are pushing up lending rates, but the banks are pushing up deposit rates much less slowly, boosting margins and profits.