Most i-banks, asset managers record lower Q4'22 earnings YOY

The majority of investment banks, broker/dealers, capital markets firms and asset managers posted year-over-year decreases in earnings in the calendar fourth-quarter of 2022.

Investment banks, broker/dealers and capital market companies

Out of the 13 investment banks, broker/dealers and capital markets companies that qualified for this S&P Global Market Intelligence analysis, nine logged lower EPS year over year, and five reported EPS declines quarter over quarter.

The combined fourth-quarter 2022 total investment banking revenue for the Big Four U.S. banks dropped 53.0% year over year as M&A and capital issuance activity declined.

Morgan Stanley logged EPS of $1.26, compared with $1.47 in the linked quarter and $2.01 in the prior-year quarter. Chairman and CEO James Gorman said he is optimistic about a rebound in investment banking activity, possibly in 2023.

"I am highly confident that when the [Federal Reserve] pauses, deal activity and underwriting activity will go up," Gorman said.

Goldman Sachs Group Inc. booked EPS of $3.32, down from $8.25 in the previous quarter and $10.81 in the year-ago quarter. In 2023, the company will experience the lingering effects of market disruptions that hampered its asset management and investment banking businesses in 2022, Chairman and CEO David Solomon said.

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Besides the Big Four, Piper Sandler Cos. reported EPS of $2.25, down from $6.54 in the 2021 fourth quarter, but up from 87 cents in the 2022 third quarter. With economic conditions making conversions from its deal pipelines uncertain, the company expects M&A advisory revenues to decline in the first quarter on a year-over-year basis.

Only three companies on the list — LPL Financial Holdings Inc., Raymond James Financial Inc. and Interactive Brokers Group Inc. — reported earnings increases both yearly and sequentially.

Raymond James executives said investment banking revenues declined 67% year over year in the last three months of 2022 as a result of "volatile and uncertain markets." The company's EPS in the period came in at $2.30, compared with $1.98 a quarter ago and $2.10 a year ago.

Asset managers

Out of the 14 asset management companies included in the analysis, 12 posted lower earnings year over year and seven logged a quarter-over-quarter drop.

Blackstone Inc. recorded EPS of 75 cents, up from no EPS in the 2022 third quarter, but down from $1.92 in the 2021 fourth quarter. As it navigated what CEO Stephen Schwarzman called "the most challenging market environment since the Global Financial Crisis," the asset manager reported a 70% decline in full-year 2022 profits from a record high in the prior year.

BlackRock Inc. was among the asset managers with lower earnings on both a quarter-over-quarter and year-over-year basis. The company booked EPS of $8.29, versus $9.25 a quarter ago and $10.63 a year ago.