The US financial group Goldman Sachs suffered a slump in investment banking profits in the second quarter of 2022. Earnings fell by 41 percent compared to the previous year. This is reported by various media, including the “Handelsblatt”. Goldman Sachs also announced on Monday that the stock issuance business had collapsed by as much as 89 percent. According to the reports, the situation at Bank of America, which also presented its quarterly results on Monday, looks similar.
In view of the current crisis cocktail, the results are not surprising. The Ukraine war, rapidly rising inflation, recession worries in the USA and Europe and ongoing bottlenecks in the supply chains are causing investors to exercise caution. Mergers and acquisitions are currently being postponed whenever possible. Just last week, the US industry leaders JP Morgan Chase and Citigroup published their quarterly results and observed similar developments as Goldman Sachs and Bank of America.
Net profit falls 47 percent
However, since professional investors in particular adjusted their portfolios in uncertain times, trading turnover at Goldman Sachs rose by 32 percent in the second quarter compared to the previous year. The consumer and wealth management division, in which the private customer business is bundled, posted record revenues of 2.2 billion dollars, according to the “Handelsblatt”. That corresponds to an increase of 25 percent compared to the second quarter of 2021. The net profit at the US investment bank still fell by 47 percent. The bottom line is that the financial group earned $2.9 billion less than a year ago. The dividend is expected to rise 25 percent to $2.50 per share in the third quarter.
Bank of America saw profits fall 33 percent year-on-year to $6.2 billion. This is reported by various media that refer to information from the “dpa” agency. Revenues rose 6 percent to $22.7 billion. However, strong growth in some business areas such as securities trading could not compensate for higher costs.
Increased risk provision
For example, Bank of America significantly increased its loan loss provisions for loans at risk of default due to the gloomy economic outlook. It also set aside around $425 million for unspecified legal conflicts. In investment banking, the bank suffered a slump, as did Goldman Sachs. (am)