Wall Street's prime brokerage engine is humming and delivering handsome gains for the largest U.S. banks. As the largest U.S. banks reported blockbuster profits this week, financiers earned bumper fees from lending to the world's most prominent multi-strategy hedge funds that rode on market volatility to produce big returns during the first half of the year.

Record Quarter for Goldman Sachs

Wall Street powerhouse Goldman Sachs witnessed a record quarter for its prime business. Equity financing revenue skyrocketed 91% from a year earlier, driven by strong growth in Asia, resulting in record average prime balances for the bank. Across its fixed income, currencies, and commodities (FICC) & equities businesses, financing revenues jumped 62% to $4.5 billion, accounting for about 37% of total FICC and equity revenues for the bank.

Goldman CEO David Solomon said, "Client activity was particularly strong in Asia, driven in part by robust AI capital formation and investment. This strength also extended into financing where we generated another quarter of record revenues as we deployed our balance sheet to support clients with average prime balances rising to another record."

Other Banks Also See Gains

At JPMorgan Chase, revenue from its markets business surged 35% during the June quarter, driven primarily by the equity markets unit — which houses the prime brokerage business — that raked in $6 billion, up 86% from the same period last year. Morgan Stanley, which alongside Goldman led the SpaceX offering, also raked in big gains from its prime brokerage unit, driven by higher average customer balances and robust growth in Asia, the bank said on Wednesday.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.