NEW YORK (Reuters Breakingviews) - Being the biggest is not always the best, as Goldman Sachs and Morgan Stanley are being reminded. Revenue from investment banking and trading at the two Wall Street titans has fallen by 7% and 10% respectively in the first nine months of this year from the same period in 2018, more than their rivals. And that doesn’t include the big top-line dent Goldman suffered from its investments in other companies. Meanwhile, two lenders often cast as supporting actors have been making the best of market wobbles.

Bank of America held up best in equity underwriting, a business currently experiencing a seven-year issuance low, according to Refinitiv data. In the nine months to September, BofA’s fee income from selling new stock for clients increased almost 3% year-on-year while declining at the lender’s four major rivals. Brian Moynihan’s bank also wins the gong for the biggest jump in M&A revenue at 25%, thanks in large part to a bumper showing over the summer months.

Mike Corbat’s Citigroup, meanwhile, posted an almost 8% increase in debt-underwriting revenue in the first three quarters, while fixed-income trading grew by almost 3%. In both cases, that narrowly beat the business’s biggest player, JPMorgan – although the bank run by Jamie Dimon put in the best performance in the third quarter, with revenue up 22%. Citi was also the only one in its peer group to post an increase in combined underwriting, advisory and trading revenue for the year to date.

Goldman Sachs avoided the worst of the pain in the last of the five major investment-banking businesses. Its equities-trading revenue slipped by just under 6%, while the rest suffered double-digit drops. Morgan Stanley remains the market leader.

While BofA and Citi can enjoy a brief turn in the limelight, it may not last. At $21 billion over nine months, JPMorgan’s investment bank rakes in around a third more revenue than its competitors. James Gorman has turned Morgan Stanley into a firm strong in both wealth and investment management, helping the bank hit $10 billion in revenue in five of the past seven quarters. Competing with these two and Goldman for top billing requires more than a couple of quarters of superior staying power.

CONTEXT NEWS

- Morgan Stanley on Oct. 17 reported third-quarter net income available to common shareholders of almost $2.1 billion, a 2% increase on the same period last year. At $1.27 per diluted share, earnings beat the mean $1.11 per share expected by sell-side analysts, according to Refinitiv data. Annualized return on equity for the period was 11.2%.

(Editing by Richard Beales and Leigh Anderson)

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