Breaking News This Morning ...
Goldman's earnings soar: Goldman Sachs's third quarter earnings jumped 47% versus the year-ago period as trading revenue rose 17%. The bank earned $2.09 billion, or $4.88 a share, easily beating analysts' estimates of $3.82 a share. A year earlier it earned $1.43 billion, or $2.90 a share. Revenue rose 19% to $8.17 billion from $6.86 billion, well above Street forecasts of $7.42 billion. Return on equity climbed to 11.2%, up from 7% in the year-earlier quarter and the first time the ratio exceeded 10% since early 2015. Wall Street Journal, Financial Times
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Family first: Visa CEO Charles Scharf, who spends most of his time at company headquarters in San Francisco while most of his family lives on the East Coast, has apparently decided that family comes first. On Monday he resigned his job, saying that he can no longer spend enough time in San Francisco "to do the job effectively." "I think to do this job properly you need to be committed to spending the appropriate amount of time in San Francisco. Given my personal situation, I don't feel that I can do that right now," said Scharf, who took the job four years ago. He will be succeeded by Alfred Kelly, a member of Visa's board and a former president of American Express. Scharf also resigned his board seat. Wall Street Journal, Financial Times, American Banker
Wall Street Journal
Temporary shift?: While three big U.S. banks have reported strong third-quarter results thanks mainly to increased trading activity, two questions remain: Is the shift temporary or more permanent, and will those competitors that pulled back from trading be hurt by that decision? "If the rebound proves lasting, big U.S. banks may be positioned to take market share from competitors, mostly Europeans, that have scaled back their trading businesses," the Journal's Heard on the Street column reports. "Less capacity and competition could make for improved overall economics of the banking industry." We may have a better sense on Wednesday after Morgan Stanley, which has been cutting back on fixed-income trading, reports third-quarter results.
More shrinkage: Deutsche Bank has seen its U.S. assets shrink from more than $400 billion in early 2014 to about $260 billion, but may have to shrink "even more radically" as it works to negotiate a mortgage-related penalty with the U.S. Justice Department. That would make it even less competitive than it is today. Actually, the big German bank has struggled to make money in the U.S. ever since it bought Bankers Trust back in 1999.
Overblown: Nine months into the year, "a sense of calm has set in over the state of the energy sector," the Financial Times reports. At the beginning of the year, collapsing oil prices raised fear that loan portfolios would be hit hard. But after hitting a 12-year low of $27.10 a barrel at the start of the year, crude prices have nearly doubled and stabilized at around $50 a barrel. This new state of affairs has "prompted bank executives to strike a more upbeat tone over their commercial loan books during third quarter earnings calls."
New York Times
Falling short: Despite reporting its best pretax profit in a decade in the third quarter, Bank of America's goal of a "decent return on equity remains a long way off," the New York Times says. "Bank of America would have had to slash expenses to just $51 per $100 of revenue in the third quarter to increase its annualized return on equity to 10 percent," the paper says. But that is still $6.5 billion short of achieving a double-digit return on equity.