Goldman Sachs’ profit drops almost by half | Free press

Fears of inflation and recession kept financial markets tense in the last quarter – debuts and mergers were rare. After brilliant business during the pandemic, American banks earned much less.

New York.

US investment bank Goldman Sachs saw profits slump in the second quarter, despite significantly higher trading revenues. In the three months to the end of June, the financial group earned $ 2.9 billion, 47 percent less than a year ago.

Goldman Sachs has suffered the collapse of traditional investment banking, which includes helping companies with IPOs, acquisitions and mergers. Banks earn a lot from fees here. However, after the pandemic boom, companies were reluctant to deal in the first half of the year.

Due to the bleak economic outlook, Goldman Sachs also significantly increased its bad credit provisions. The US Federal Reserve is tightening its monetary policy due to high inflation, but rising interest rates carry the risk of stalling the economy. Experts fear a recession that could lead to non-payment.

Goldman Sachs also benefits from stage fright

However, the great nervousness in the financial markets also affects the hands of banks such as Goldman Sachs. As many investors adjusted their portfolios, there was a securities boom in the past quarter. Goldman CEO David Solomon spoke of “solid results” in his annual report. But in total, the treasury’s revenue dropped 23 percent to $ 11.9 billion.

Despite the sharp downturn, the quarterly report was well received by the stock exchange. Shares in the US started trading 4.5%. Analysts expected much weaker data on average. Goldman Sachs also announced a quarterly dividend increase from USD 2.0 to USD 2.5 per share.

At Bank of America, higher provisions for bad credit and legal costs saw profits drop 33 percent year-on-year to $ 6.2 billion, a US lender said Monday. Revenue rose 6 percent to $ 22.7 billion. However, strong growth in some business areas, such as securities trading, could not offset the higher costs. (dpa)

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