Even though both Goldman Sachs Group, Inc. (NYSE: GS) and Bank of America Corp.’s revenues topped Wall Street’s expectations, bank investors still weren’t satisfied.
Shareholders worry about Bank of America’s lower than expected net interest income because of a slip in the lender’s net interest margin but it is not enough to decline their rising rates. Net interest income totaled to $11 billion and gained 9% marking it the biggest second quarter haul since 2011. Goldman Sachs on the other hand, disappointed investors by their fixed income and currencies and commodities (FICC) trading arm marking it the lowest revenue since 2008. This is a 40% decrease since last year and was the worst quarter by far.
Goldman Sachs’ weak performance in fixed income, currencies and commodities trading should suggest they downsize, a move that rival Morgan Stanley was able to make without losing ground. Morgan Stanley was able to beat Goldman Sachs’ fixed income for the first time in almost 6 years with a smaller number of traders and salespeople after downsizing. As a result, they maintained and boosted their market share while also increasing their overall profitability.
Goldman Sachs aims to review the direction for their commodities arm as investors encourage them downsize.