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Bank of America, Wells Fargo, Goldman Sachs posts Q3 earnings reports

Yahoo Finance's Emily McCormick joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss third-quarter earnings reports from big banks including Bank of America, Wells Fargo and Goldman Sachs.

Video Transcript

ALEXIS CHRISTOFORUS: Yahoo Finance's Emily McCormick is here now with more on these key earnings reports. So Emily, let's start with Bank of America first. Profit down about 16%, what are the details there?

EMILY MCCORMICK: Well, Alexis, taking a look at Bank of America, this company breaking away from the pack of the other big banks in missing expectations around trading revenue. That was really the anchor here on results that we saw this morning.

Now, we saw sales and trading revenue from fixed income and equities at $3.3 billion. That was less than the $3 and 1/2 billion that Wall Street was expecting. And we saw that overall revenue fell 11% over last year to $2.3 billion. So a decline on the top and bottom lines that we saw from Bank of America for these third quarter results.

Now, that was definitely a disappointing detail from this release, since the Street had been looking for the company to lean more heavily on its markets, its trading revenue, in lieu of the fact that consumer banking has been a little bit of a weaker point here for this bank and for others, given the coronavirus pandemic and its impact on the retail consumer.

Also worth noting, though, on head count, Bank of America did explicitly note in its press release that it remains committed to no COVID-19 related layoffs in 2020. It's a difference from some of the reports we've been getting from other big banks, including Wells Fargo, which have reportedly been moving ahead with layoffs given the lingering pandemic and its impact on, now, the banking sector as well, Alexis.

ALEXIS CHRISTOFORUS: All right, let's switch gears here and talk a little Goldman Sachs. I guess their bond trading desks were humming last quarter.

EMILY MCCORMICK: Absolutely. Taking a look at that fixed income net revenue, that was up 49% over last year to $2 and 1/2 billion, definitely a strong point here. We also saw asset management revenue up 71%, nearly $2.8 billion for Goldman Sachs.

Now, taking a look at investment banking, that was up 7% to $1.97 billion, also ahead of estimates. Although, it was a bit of a moderation compared to what we saw in the second quarter, but that IPO underwriting revenue still definitely a strong point here, given the surge in public offerings we saw over the summer.

Now, just taking a look at those overall results, we saw earnings of $9.68 per share, much better than the $5.53 expected. Also, grew over last year. And we saw that revenue of $10.8 billion was ahead of the $9.4 billion consensus, Alexis.

ALEXIS CHRISTOFORUS: All right, we've got to talk a little Wells Fargo. And it looks like low interest rates hit their interest income.

EMILY MCCORMICK: That's right. So taking a look at Wells Fargo, we did see the company swing back to a profit in the third quarter after posting a loss in the second. However, this profit was lighter than expected. As you mentioned, we saw that net interest income at $9.4 billion, below estimates for $9.6 billion. And that came even us provision expenses were lighter than expected. Those provisions for credit losses were $769 million. That was less than half the $1.65 billion anticipated.

The other thing I want to point out here from Wells Fargo is some commentary around the economy that CEO Charlie Scharf mentioned in this morning's release. He said, quote, as we look forward, the trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain. But we've remained strong with our capital and liquidity levels well above regulatory minimums. So a little bit of color here on what these big bank CEOs are anticipating for the economy going forward.

And I do want to highlight, where Wells Fargo shares are off about 1% in early trading, Goldman Sachs shares up 2%. Bank of America down about 2% as well, Alexis.