INCREASING Goldman Sachs’ income rise 94%
NEW YORK: Goldman Sachs reported strong third-quarter results Wednesday (Thursday in Manila), nearly DOUBLING PROfiTS AND REflECTING LITTLE of the vulnerability that has plagued other corners of the economy during the pandemic.
Key strengths to the money machine at Wall Street's iconic investMENT BANK INCLUDED A "SIGNIfiCANT" increase in initial public offerings and a surge in revenues from its markets division.
The strong Goldman numbers easily eclipsed mixed results from Bank of America and Wells Fargo, which are much more heavily focused on consumer lending.
Both Bank of America and Wells FARGO SAW A PROfiT HIT FOLLOWING FEDeral Reserve interest rate cuts to support the economy, offset somewhat by much lower reserves set aside for bad loans compared with the prior two quarters.
Bank executives have warned that the US recovery could falter if
Washington fails to enact additional stimulus following the expiration of key programs to support unemployed workers and embattled industries.
At Goldman, net income came in at $3.5 billion, up 94 percent from the year-ago period and topping analyst estimates by a wide margin. Revenues rose 30 percent to $10.8 billion.
Goldman set aside $278 million for credit losses, well below the $1.6 billion it allotted for bad loans in the prior quarter, when the most severe Covid-19 restrictions were in effect.
Trading has generally been a strength for large banks during the pandemic, boosting commission fees as markets have swerved. Volatility "declined modestly" in the third quarter, Goldman said.
Goldman's revenue rose in all four divisions compared with the year-ago period. Revenues from equity investments soared 139 percent FROM THE YEAR-AGO PERIOD, REflECTING an ascendant stock market during the period.
Chief Executive David Solomon lauded the company's performance amid the downturn, adding that he would maintain "vigilance" given "potential weakness in the broader economy."
Bank of America reported a 16 percent drop in quarterly profits to $4.9 billion on a 10.8 percent decline in revenues to $20.3 billion. THE DROP IN PROfiTS REflECTED MUCH lower net interest income following Fed rate cuts.
Bank of America set aside $1.4 billion for bad loans, which was above the year-ago level, but well below the $5.1 billion held in the prior quarter.
Some of the funds are to cover loans to travel and entertainment companies that have suffered as social distancing restrictions have depressed demand. But the bank released $ 179 million in consumer banking that had been previously reserved due to an improving economy.