In its 2010 Outlook report, Citigroup (NYSE:C) reduced its profit projections for Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc (NYSE:GS) and JPMorgan Chase & Co (NYSE:JPM), citing significant reductions in trading by the financial institutions.
Morgan Stanley led the way in the downward per share earnings adjustment of the three banks in the fourth quarter, falling by 30 cents to 36 cent a share. Goldman Sachs was next with a cut of 25 cents on per share earnings to $5.25, while JPMorgan dropped by 15 cents a share earnings estimate to 55 cents.
Bank of America’s (NYSE:BAC) original estimate for the fourth-quarter of a $0.66 loss per share was kept the same by Citi in the report.
Going forward, the Citi projections for 2010 for FICC revenues were that commodities should enjoy growth, with increases between five to 10 percent in revenue expected there. On the other hand, Credit trading is expected to dive by ten percent, basically negating the revenue from commodity earnings increases. Mortgages are projected to fall by 15 – 20 percent, while Rates will fall 25 – 30 percent and FX 20 – 25 percent. Taken together, expectations are FICC revenues will plunge between 15 – 20 percent for 2010.
Bank of America had its estimates for 2010 dropped by $0.45 to $0.50 by analysts.
For Goldman Sachs, analysts’ estimates for 2010 remained the same, with $19 still being the target number looked for.
2010 estimates for Morgan Stanley fell to $2.90 for earnings per share.
JPMorgan had earnings per share slashed to $3.10 from $3.60 for 2010.
Taking into account all factors, if these earnings estimates for 2009 and 2010 hold, it’s going to be a tough year going forward, as much of the earnings for 2009 were based upon the record $190 billion in FICC revenues generated by the banks.
