Posted Jan 19, 2022, 5:37 PMUpdated on Jan 19, 2022 at 8:01 PM
Better to accentuate a warning shot than to expose yourself to a blow from Trafalgar. The chain of banking contamination, since the publications deemed disappointing by JP Morgan and Goldman Sachs, could be broken, thanks to those very satisfactory from Bank of America and Morgan Stanley.
The little music hoped for by far-sighted investors has finally made itself heard, without however regaining all the lost ground. They had clearly seen the deflation of trading income coming, and the growth relay gradually offered by net interest income (interest received less interest paid) across the Atlantic, thanks to the recovery in demand for credit and the rise Fed rates.
Technological and human investments, against a background of inflation, complicate the deal. But it is above all the cacophony of the “CEOs” about their operational leverage that complicates the task of the sectoral oracles.
Business models
The best barrier gesture against disappointments consists in not putting all these banking giants in the same bag. The boss of Morgan Stanley, James Gorman, has further marked his difference, while raising his target for return on equity.
According to him, his business model is distinguished by the strong link between remuneration and production. As for its big acquisitions of E Trade and Eaton Vance, in 2020 and 2021, they also allowed it to acquire technologies.
A noter
Morgan Stanley is now targeting a return on tangible equity of at least 20% over the medium term, compared to at least 17% previously.
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