Goldman Sachs almost doubles profit to $3.5 billion

  • Goldman Sachs almost doubles profit to $3.5 billion

Goldman Sachs almost doubles profit to $3.5 billion

Revenue rose at all four of its business units, with total revenue up 30 percent to $10.8 billion.

On Tuesday, rivals JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C) posted results that beat analysts' expectations as both banks set aside less money for defaulting loans.

Goldman's shares rose 0.6 per cent in early trading as shares of other big lenders fell.

The trading division generated $4.55 billion in revenue, a 29% increase from a year earlier, which was fueled by bond trading results of $2.5 billion, almost half a billion dollars more than analysts expected. Its performance was driven in large part by a 29 percent jump in trading revenue, as clients responded to news about the coronavirus pandemic by shifting their portfolios.

The bank is in the middle of a business-model revamp orchestrated by CEO David Solomon, which includes building out its consumer bank "Marcus" and adding services like retail wealth management.

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.

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.

Also during the quarter, Goldman enjoyed its second highest quarterly revenues from equity underwriting ever, topping the global ranking for completed mergers and acquisitions and for IPOs.

Goldman expects the trends to continue through at least the end of the year, as markets remain volatile and its investment banking backlog has grown, Chief Financial Officer Stephen Scherr said on an analyst call.

The bank's overall profit almost doubled US$3.5 billion from US$1.8 billion a year ago.

There's no telling how long Goldman will have the wind at its back, but it is making the most of these unusual market dynamics.

Analysts had expected a profit of US$5.57 per share, on average, the IBES estimate from Refinitiv showed.

Net earnings for the third quarter was $3.62 billion, or $9.68 per share, compared to net earnings of $1.87 billion, or $4.79 per share in the third quarter of 2019. That was above the US$9.5 billion consensus estimate.