‘It’s hard to call the peak’: Wall Street banks land $22bn trading haul

In the third quarter, Wall Street's leading banks continued their impressive winning streak, generating a combined $22 billion in trading revenue. Goldman Sachs led the pack with a remarkable 72% annual growth, reaching $6.4 billion, while Morgan Stanley secured the second spot with $5.8 billion, following a 41% jump. The surge in prime brokerage and portfolio refinancing, along with hedge funds borrowing more cash to make larger bets across sectors and stock markets, contributed to the trading desks' success.

Despite Goldman and Bank of America reporting double-digit growth in prime balances, the total revenue for the group fell by 6.7% from the previous quarter's haul. Bank of America's update was marred by a substantial $1.2 billion fine from the US Treasury Department due to its failure to report more than $5 billion in suspicious activity.

Net income for Bank of America dropped 17% to $6.9 billion after the charge. Higher interest rates contributed to a "shared positive" across investment banking activity, with Goldman's investment bank fees slipping 5% to $3.2 billion and JP Morgan posting a 9% drop-off to $22.7 billion. Fed's interest rate hike to 3.75% to 4% was driven by inflationary pressures fueled by the US-Iran war.

Analysts see the boost in lending income as a positive sign for UK banks when they report their third-quarter updates. However, the quarter is expected to be overshadowed by the UK Chancellor John Healey's first Budget on October 28, as he faces a "challenging" fiscal picture and may implement major tax raids on the banking sector.