Goldman Sachs Quarterly Profit Falls 46%
15 April 2020 - 10:07PM
Dow Jones News
By Liz Hoffman
Goldman Sachs Group Inc.'s profit fell 46% in the first quarter,
a three-month stretch when the coronavirus pandemic battered
markets, companies and investors hoarded cash and the U.S. economy
ground to a halt.
The Wall Street bank reported a quarterly profit of $1.21
billion, or $3.11 a share, down from $2.25 billion a year ago.
Revenue of $8.74 billion was basically flat from the first quarter
of 2019.
The results met muted expectations from Wall Street analysts but
held up slightly better than rivals JPMorgan Chase & Co. and
Wells Fargo & Co., which both reported steep declines in
quarterly profits on Tuesday. Analysts polled by FactSet had
expected earnings of $1.4 billion, or $3.11 per share, on revenue
of $8.3 billion.
The first three months of 2020 presented banks their most
daunting challenges in more than a decade, with interest rates
falling near zero and the global economy in freefall. Companies
tapped their credit lines -- $144 billion in a single week in March
alone, according to Morgan Stanley analysts -- an unprofitable and
anxiety-producing development for their lenders.
JPMorgan Chase, the largest U.S. bank, reported a 69% drop in
quarterly profits on Tuesday. Wells Fargo, another giant, reported
an 89% drop.
Still, most of the pain for banks is yet to come. As a proxy for
the economy, bank results tend to be lagging indicators of trouble.
Nearly one-third of U.S. renters didn't make their April monthly
payments, a move that will take a few weeks to ricochet through the
mortgage market. Credit-card balances are likely to go unpaid,
too.
JPMorgan and Wells Fargo socked away an extra $10 billion
between them to cover expected loan losses. At Goldman -- a smaller
firm whose roots are in Wall Street investment banking, not Main
Street commercial banking -- that number was $937 million, nearly
as much as the $1.07 billion it set aside in all of 2019.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
April 15, 2020 07:52 ET (11:52 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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