Big banks beating Q2 estimates, but will credit worries sink sector

investmentnews.com:

It’s an introspective week on Wall Street as a slew of banks and brokers report their second quarter earnings. Financial advisors, of course, are taking note as well, deciding whether they want to be buyers or sellers of some of their competitors shares.

Among the financial giants that have reported results so far, Morgan Stanley (Ticker: MS) posted $3.08 billion in net income for the quarter on $15.02 billion in revenue today, beating analysts’ expectations. Earnings per share at the investment bank came in at $1.82, led by investment-banking fees which soared 51 percent from a year earlier. 

Morgan Stanley’s wealth unit fell short of Street expectations with $6.79 billion in revenue for the quarter. Net new assets in that business totaled $36.4 billion, short of the pace needed for the bank to reach its annual target, while net interest income slumped.

Morgan Stanley’s earnings report followed on the heels of rival Goldman Sachs’ (Ticker: GS) impressive second quarter results. Goldman posted earnings yesterday that were 2.5 times higher than a year ago, also trumping analysts’ forecasts. Goldman said its net income was $3.04 billion on $12.7 billion in revenue in the three months through June 30.

Elsewhere, Charles Schwab (Ticker: SCHW) reported $1.33 billion in net income for the three-month period, beating a $1.23 billion average of analyst estimates. Earnings per share for the quarter were 66 cents, also exceeding Wall Street expectations.

Schwab said new brokerage accounts in the quarter rose to 985,000. Nevertheless, while that number is up from 960,000 in the same period a year earlier, it’s less than the 1.04 million analysts were expecting. 

As a result, Schwab’s shares sank 9 percent in midday trading on