12 Best & Worst Broker-Dealers: Q3 Earnings, 2018

The third quarter was a good one for most financial companies and broker-dealers, which benefited from a strong economy, tax breaks and a nearly 8% rise in the S&P 500.

According to FactSet, three-quarters of financial companies reported earnings that topped estimates.

Overall, the financial sector had average earnings growth of 36% in Q3. Diversified financial firms within this group had an improvement of 103%, while banks grew earnings 22%.

Close to 90% of financial firms reported an increase in their net profit margins in the latest quarter vs. Q3’17, FactSet said.

Commercial banks and savings institutions, for instance, had total net income of $62 billion in Q3, up 30% from a year ago, according to the Federal Deposit Insurance Corporation.

Of the broker-dealers highlighted in this slideshow, the average increase in net income was 27.5% in Q3’18, down from an average of 35% in Q2’18.

As for what’s next, FactSet expects the financial sector to report an average earnings improvement of 17% in Q4’18 and a 5% bump in average revenue.

So far, though, this final quarter of 2018 is proving to be a bumpy one for broker-dealers and companies across industries, especially the energy sector. On Nov. 23, the S&P 500 index dropped into correction territory.

“The loss of earnings momentum from higher interest rates, coupled with sluggish loan growth and credit worries have financial stock investors nervous,” according to Frederick Cannon, CFA, and Luke Wooten of KBW.

All figures cited in the gallery above reflect year-over-year changes in performance.

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