Goldman Sachs' profits more than double, despite pandemic

  • Goldman Sachs' profits more than double, despite pandemic

Goldman Sachs' profits more than double, despite pandemic

Analysts were expecting earnings of $ 7.47 per share on average, according to Refinitiv's IBES estimate.

Revenue from global markets, which houses Goldman's trading business, registered its best annual performance in a decade as investors churned their portfolios at the end of a roller-coaster year for financial markets amid the Covid-19 pandemic. Revenue of $11.74 billion exceeded the estimate by about $1.75 billion.

For the USA banking industry, 2020 was a roller coaster year.

Sales of the unit jumped 23% to $ 4.27 billion in the quarter, topping $ 21.2 billion in a full year. He wants to grow businesses with more predictable businesses like consumer banking, mass-market wealth management and managing cash for companies. Wells Fargo & Co. reported a rise in fourth-quarter profit, too, while Citigroup Inc. reported a profit decline that was smaller than analysts expected.

On Friday, JPMorgan Chase & Co. said fourth-quarter profit soared 42% to a record $12.14 billion after the bank released $2.9 billion from its stockpile of funds previously set aside to cover soured loans.

Like JPMorgan and others that reported last week, Bank of America's results were boosted by an $828 million reserve release after earlier provisions for bad loans from coronavirus were not needed. Initial public offerings, corporate borrowing and major stock indexes hit new records in 2020, all trends that Goldman capitalized on. The firm's investment bankers brought in $1.64 billion in fees from helping to arrange corporate stock and bond offerings, up 68% from a year earlier, as well as $1.1 billion in merger fees.

"It was a challenging year on many fronts, and I am deeply proud of how our people helped clients respond to the economic disruption brought on by the pandemic and the extreme market volatility experienced over the past months", Chief Executive David Solomon said.

The bank's shares jumped 2.6% early in the session, adding to a 20% gain previous year.

Goldman Sachs has been building up its consumer-oriented Marcus business since 2016, and Solomon indicated plans to continue to invest in the venture.

Like other banks, though, the profitability of Goldman's lending and deposit-taking business has been crimped by low interest rates and stricter loan-approval standards.

Shares in Goldman rose some 60% since the end of October to hit an all-time high of $307.87 last week, vaulting the bank's market value above $100 billion.

Goldman's latest performance was all the more impressive as it comfortably absorbed a $ 3 billion blow to its annual profits, after reaching a deal with the US Department of Justice and other US and foreign regulators on his role in the 1MDB corruption scandal in Malaysia. Fourth-quarter compensation expenses also fell 19% to $2.48 billion.

One big change at Goldman from the last time it reported revenue this high is how much of it went into employees' pockets.

The investment bank spent $13.3bn (£9.8bn) on pay and bonuses in 2020 despite Covid triggering a recession, up 8pc from the previous year but still $2bn less than the 2010 total.