Goldman Sachs Group Inc.
reported sharply higher profit for the third quarter, the latest confirmation that, even in a pandemic and a recession, Wall Street can still make money.
Goldman reported quarterly profit of $3.62 billion, or $9.68 a share, on revenue of $10.78 billion. Both measures were up from a year ago and better than the expectations of stock analysts, who forecast $1.94 billion in profit, or $5.54 a share, on revenue of $9.38 billion.
Worries that the coronavirus would rival 2008 as a threat to the U.S. financial system have subsided for now. Banks’ trading fees have surged. Bond investors’ appetite has allowed companies that borrowed billions from banks in emergency loans this spring to pay them back. Big corporate bankruptcies have leveled off.
Pain may still lie ahead, especially if unemployment stays high and a resurgence in the virus sparks new or tougher lockdowns. But unlike the 2008 crisis, when banks posted multibillion-dollar losses, today’s lenders are still squarely in the black. And they aren’t facing the same investor panic that sparked fatal bank runs last time around.
& Co. doubled from the second quarter and was 4% higher than a year ago, when the U.S. economy was booming. After socking away some $19 billion earlier this year as a cushion for expected loan defaults, the bank added only modestly to that number in the quarter.
Bank of America Corp.
were profitable, too, though less so than a year ago.
Goldman has had a relatively easy crisis so far. Efforts by the Federal Reserve to support markets have allowed the firm to move loans off its books and reap fees by buying and selling securities. And with a smaller lending book—about $117 billion as of June 30 to JPMorgan’s nearly $1 trillion—it is less exposed to defaults.
Trading revenue rose 29% from a year ago to $4.55 billion. The firm’s investment bankers brought in $1.43 billion from helping to arrange corporate stock and bond offerings, up 60% from a year ago and compensating for a drop in merger fees.
Goldman set aside $278 million for loan losses, in part on higher expected charge-offs in its new credit-card business. But that was less than one-fifth of what it set aside in the second quarter.
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