Bear Stearns reported a 16% gain in third-quarter profits on Thursday, becoming the third big Wall Street investment firm to exceed analyst expectations this week.
In the quarter, Bear Stearns earned $438 million, or $3.02 a share, up from $378 million, or $2.69 a share. Net revenue at Bear Stearns rose nearly 18% to $2.13 billion.
Analysts, as surveyed by Thomson Financial, were looking for earnings of $2.87 a share on revenue of $2.1 billion.
The solid earnings news comes the same week that Goldman Sachs and Lehman Brothers also beat analyst expectations by side margins. Most analysts had expected earnings at the big Wall Street firms to suffer amid signs that the economy is slowing down. But if that's the case, there are few signs of a slowdown on Wall Street.
The big profit gains at Bear Stearns were fueled by 25% jump in revenue from principal transactions, which include revenue from trading and investment gains.
The year-over-year surge in trading revenue helped offset weakness in the firm's investment-banking group. Fees from investment-banking activity fell 10% compared with a year ago to $283 million.
The firm's institutional equities group, which includes stock-related proprietary trading and stock underwriting, posted particularly impressive numbers. The group generated a 42% increase in revenue to $1.48 billion.
Overall, the firm's capital markets division posted a nearly 13% rise in revenues to $1.5 billion. Bear Stearns big clearing operation, which includes its hedge fund prime brokerage group, saw revenue rise 4.4% to $269 million.
Total non-interest expense, which includes compensation, rose 17% to $1.46 billion.