Goldman profits more than double
Bank of America Q4 profit falls 18% on lower interest rates
NEW YORK, Jan 19, (AP): Goldman Sachs said its profits more than doubled from a year earlier thanks to a surge in both trading and advising revenue.
The New York-based investment bank said it earned a profit of $4.36 billion, or $12.08 per share, up from a profit of $1.72 billion, or $4.69 a share, in the same period a year earlier. The earnings were significantly better than the $7.45-per-share profit that analysts were expecting.
Goldman’s results reflect that Wall Street had a strong year, despite the pandemic and millions of Americans out of work. After plunging sharply in March and April, the stock market went basically straight up for seven months as investors tried to look beyond the near-term death and pain and focus on where the U.S. economy will
While Democrats have endorsed the effort, many Republican lawmakers have expressed concerns about the price tag given soaring federal budget deficits.
Yellen said that she and Biden were aware of the country’s rising debt burden.
“But right now, with interest rates at historic lows, the smartest thing we can do is act big,” she said. “In be in a year or two years’ time.
Goldman’s profits were driven higher by its investment bank and trading desks, the cornerstone to the bank’s business models. Investment banking revenue was up 29% from a year earlier to $2.73 billion. The bank saw higher underwriting revenues - fees the bank collects to take companies public or underwrite debt they want to offer as well as trading revenue, which rose 23% from a year earlier.
The banks also saw revenue gains in its wealth management arm as well is nascent consumer banking business, which focuses on consumer loans, savings accounts as well as handling the underwriting for Apple’s credit card. Like its competitors, Goldman also moved some of the money it had set aside to cover credit losses out of its
the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.”
The Senate Finance Committee hearing with Yellen on Tuesday is one of several that the Senate will be holding as the incoming Biden administration tries to get its top Cabinet officials in office quickly. reserves. However Goldman’s exposure through consumer and business loans is significantly smaller than commercial banks like Citigroup, JPMorgan Chase and Wells Fargo so it wasn’t a significant part of its overall results.
The stellar quarter also will result in stellar bonuses for Goldman’s wellcompensated employees. The bank set aside $13.31 billion to pay out bonuses and payroll this year, up 8% from a year earlier. Most of Goldman’s top employees make most of their money in year-end bonuses.
Meanwhile, Bank of America’s fourth-quarter profits fell 18% from a year ago, as lower interest rates weighed down its results. However the bank was able to release more than $800 million from its credit reserves, a sign that it sees the U.S. economy improving in the coming months.
The North Carolina-based bank said Tuesday that it earned a profit of $5.47 billion, or 59 cents a share, down from a profit $6.99 billion, or 74 cents per share, in the same period a year earlier. Analysts were expecting BofA to earn 56 cents a share, according to Zacks Investment Research.
Like its Wall Street competitors, Bank of America was able to release hundreds of millions of dollars from its loan-loss reserves - money the bank had set aside earlier in the pandemic to cover loans that might be now be unpayable. But as the economy has relatively improved, banks have been able to free up some of those reserves.
In the quarter, BofA released $828 million from its credit reserves. This type of release goes straight to a bank’s bottom line, but it’s largely because the money was moved out of an escrow-like account and was now free to be used again.
Low interest rates were the biggest drag on BofA’s results compared to last year. The Federal Reserve sharply cut rates once the pandemic hit. Bank of America’s balance sheet is heavily weighted toward short-term interest rates, so it was hit harder than the rest of its competitors. Interest revenue in the quarter went from $12.14 billion to $10.25 billion.