Higher revenues, but even higher costs.
(Photo: Reuters)
new York The big US investment banks Goldman Sachs and Bank of America earned significantly less in the second quarter. Despite significantly higher trading revenues, Goldman Sachs earned $2.9 billion in the three months ended June, down 47 percent from a year ago. The financial group announced this on Monday.
In view of a bleak economic outlook, Goldman significantly increased risk provisions for bad loans. In addition, the income from classic investment banking, which includes supporting companies with IPOs as well as takeovers and mergers, collapsed.
The nervousness on the financial markets, where many investors were reorganizing their portfolios because of fears of inflation and recession, caused the securities trading business to boom. Goldman CEO David Solomon spoke of “solid results”. But overall, the money house’s income fell by 23 percent to $ 11.9 billion.
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On average, analysts had expected weaker numbers. Goldman Sachs also announced an increase in its quarterly dividend from $2.0 to $2.5 per share.
Higher loan loss provisions at Bank of America
The situation at Bank of America is similar. Profits here fell 33 percent year-on-year to $6.2 billion. Revenues rose 6 percent to $22.7 billion. However, strong growth in some business areas such as securities trading could not offset higher costs.
The bank increased risk provisions for loans threatened with default due to the gloomy economic outlook and also set aside around 425 million dollars for unspecified legal conflicts.
It didn’t go well in all divisions either. In investment banking, for example, revenue collapsed due to a lack of IPOs and mergers. The share initially reacted to the numbers with price losses before the market, but quickly recovered.
The large US institutes JP Morgan and Morgan Stanley had already presented their figures for the second quarter in the previous week. Both houses are also struggling with significantly declining results and gloomy prospects.
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