Financial Services kingpin Morgan Stanley (MS.N) is a trusty leading world-class investment bank and wealth management firm. Although it has fared well through many trials thrown its way since the foundation, this year might still see it in a predicament of some sort. On Monday, CEO James Gorman had cautioned there would be a “bumpy” ride in store for the shareholders. There is a ballpark estimate of 50% that the U.S. economy may enter a recession, albeit not too severe; Gorman had stated in a press conference prompted by the Wall Street bank that there are 50-50 odds now for them to consider. He has newly amended his prediction from May when word spread among the shareholders that the mere plausibility of a recession was lesser than 50%.
Nonetheless, he emphasized that it will most certainly be bumpy. The U.S. retirement plans (people’s 401K scheme) will face a decline by December. On the brighter side, it wouldn’t be a recession lasting longer than they can bear to endure.
It is also a good sign that the U.S. consumers and companies have been built to last through harsh droughts—their financial conditions may persevere them through the recession. This will aid in the economy’s rebuilding if faced with any shrinkage, and cushion American banks from possible aftermath. Or so is claimed by the executives who made official statements at the financial industry conference held for Morgan Stanley, and we’re hoping they’re as ready as they seem to block another dent in the country’s economy after the recent Ukraine war and still easing pandemic regulations.
Meanwhile, the Chief Financial Officer Alastair Borthwick who overlooked all of the Bank of America Corp’s (BAC.N) had stated the loan portfolio belonging to his bank was yet to indicate any ominous signs of a recession. The back takes home a trophy for being the second-largest U.S. bank by assets. When prodded further about the asset quality, he replied that while there is this valid question of future concerns, there is also the other side of the coin—which is what they are certain of at this moment. And right now, the credit is in excellent shape, and therefore he isn’t as worried. This month, the reported customer spending has hiked to a 9% compared to 2021, although the average balances for the credit card remain lower than before the pandemic struck. These signs are considered to be proof of the customer’s stable financial bracket, as per Borthwick’s statement.
The corporate clientele continues to lean towards exposure and credit quality in various sectors including but not limited to—travel, eateries, and the hotel is certainly surging forward. Not to be thwarted anytime in the foreseeable future. They are also seeing reasonable growth in loans right now, tacking on that it was as forecasted previously.
His current statements have reflected similarly to those uttered by the Chief Executive of JPMorgan (JPM.N). Jamie Dimon had remarked that the industry-level inflation, the aftermath of the Ukraine & Russia situation, the pandemic, and other identical economic crises were no different than a “hurricane” changing course and striking where they didn’t expect it.
Conclusively though, both representatives from these powerhouses agree that the investment banking environment is set for a challenging, rocky path, as a lesser number of companies publicly voiced their preparation in the volatile market.