Creeping costs

17 September 2004 By Rob Cox Follow @rob1cox

Costs have risen in the last year and revenues are declining. Trading income is falling and corporate finance businesses are treading water. Thirdquarter results from Goldman and Morgan Stanley next week may showcase how Wall Street is coping with this dynamic.

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US investment banks begin reporting fiscal thirdquarter results on Tuesday, with the release of earnings from Goldman Sachs and Lehman Brothers, followed a day later by Morgan Stanley and Bear Stearns. Earnings per share at Goldman are expected to rise slightly to $1.46 from $1.32 a share and decline at Lehman to $1.55 from $1.81 and at Morgan Stanley to $0.96 from $1.15 a share.

During the quarter, trading profits are expected to have declined across the industry, though fees from mergers may have risen as the level of completed deals rose 17% from the previous quarter ended in May, and rose by half from the yearearlier period, according to Dealogic.

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Creeping costs

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