Fears of inflation and recession kept the financial markets in suspense in the last quarter – IPOs and mergers were rare. After brilliant business in the pandemic, US banks earned significantly less.
New York – The US investment bank Goldman Sachs suffered a slump in profits in the second quarter despite significantly higher proceeds from the trading business. In the three months to the end of June, the financial group earned a bottom line of 2.9 billion dollars, 47 percent less than a year ago.
Goldman Sachs felt the slump in traditional investment banking, which includes assisting companies with IPOs, takeovers and mergers. Banks earn a lot here through fees. But after the boom during the pandemic, companies were very reluctant to deal with deals in the first half of the year.
In view of the gloomy economic outlook, Goldman Sachs also significantly increased risk provisions for bad loans. The US Federal Reserve is tightening its monetary policy because of the high inflation, but rising interest rates harbor the risk of stalling the economy. Experts fear a recession that could lead to payment defaults.
Goldman Sachs is also benefiting from jitters
However, the great nervousness on the financial markets also plays into the hands of banks such as Goldman Sachs. As many investors adjusted their portfolios, securities trading boomed in the past quarter. Goldman CEO David Solomon spoke of “solid results” in the annual report. But overall, the money house’s income fell by 23 percent to $ 11.9 billion.
Despite the sharp drop in business, the quarterly report was well received on the stock exchange. The stock started US trading up 4.5 percent. Analysts had expected significantly weaker numbers on average. Goldman Sachs also announced an increase in its quarterly dividend from $2.0 to $2.5 per share.
At Bank of America, higher reserves for bad loans and legal costs caused profits to fall 33 percent year-on-year to $6.2 billion, the US lender said on Monday. Revenues rose 6 percent to $22.7 billion. However, strong growth in some business areas such as securities trading could not offset higher costs. dpa
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