Shares of Goldman Sachs rose after posting profit growth in the 3rd quarter, while shares of Bank of America and Wells Fargo responded with a decline on the decrease in profit of banks. Profit growth Goldman Sachs contributed to the increase in revenues from trading operations in financial markets and profitable at this time, a small fraction of the consumer business.
On Wednesday, after JPMorgan Chase (JPM) and Citigroup (C) their reports in 3 financial quarter ended 30 September, issued Goldman Sachs (GS), Bank of America (BAC) and Wells Fargo (WFC).
The results have been mixed and Bank stocks reacted to the report in different ways.
Ahead of today’s quarterly report, Goldman Sachs, Wells Fargo and Bank of America fell 1.55%, 2,84% and 3,66%, respectively.
Analysts pointed out that banks have allocated significantly less of the reserve to cover potential defaults on loans, in contrast to the amounts in the previous report for the 2nd quarter, when economists first announced the start of the recession in the United States.
Market experts see this as a positive signal of U.S. banks that they expect the recovery of the economy gets a kick because of the pandemic coronavirus.
Marketinfo.pro in the article “Growth in quarterly profit JPMorgan gives an optimistic start to the financial statements among banks” wrote that the experts of JPMorgan Chase improved its forecasts for unemployment in the country.
On Wednesday Goldman Sachs, which fell by 8.3% YTD, up 1% (at the time of this writing) as investors welcomed the Bank’s profit growth relative to the previous two quarters and last year’s value, as well as higher than expected on wall Street, main indicators.
Goldman Sachs reported earnings per share 3rd quarter $of 9.68, which is twice higher than last year’s value of $4,79 and a $4.11 more than the average analyst estimate of $5,57. The total profit of the Bank for the quarter grew to $3.5 billion from $1.8 billion a year earlier.
The total quarterly income Goldman Sachs rose by 44% to $10,78 billion, also above analytical estimates of $9,46 billion to See the quarterly history of revenue and profit Goldman Sachs for the last 2 years can link.
The increase was due to the business model of Goldman Sachs, under which the Bank places greater emphasis on commercial transactions and has a relatively small business consumer banking.
Income from trading fixed income rose 49% to $2.5 billion, and revenue from stock trading rose 10% to $2.05 billion Revenue from investment banking rose 7% to $1.97 billion Income from asset management increased by 77% to $2.77 billion
Income from wealth management increased 13% to $1.49 billion
Reserve Goldman Sachs to cover losses on loans decreased to $278 million in the third quarter with $1.59 billion in the second quarter and $291 million a year earlier.
In the conditions of decrease in consumer ability of the Americans and, on the contrary, the increased volatility and IPO in the stock markets, the model of Goldman Sachs, focused on getting large returns from trading stocks, bonds and other financial instruments showed the best result than the model of the Bank of America and Wells Fargo, credit-oriented and real estate investment.
As heads of Bank of America and Wells Fargo executives explained the decline in quarterly net profit low interest rates the Central Bank.
Bank of America
Bank of America shares lost 29% since the beginning of the year, fell 4% after the report is published (at the time of this writing).
Bank of America reported a 9% decline in earnings per share 3rd quarter to $0.51 in, but it’s by $0.02 more than analyst estimate of $0.49 for.
The income of the Bank fell 11% to $20.3 billion, which was worse than forecast of $20,81 billion to See the quarterly history of revenue and profit Bank of America for the last 2 years can link.
The revenues of the largest division, consumer banking services fell by 17% to $8 billion.
Income from asset management fell 7% to $4.5 billion.
Global banking revenue fell 13% to $4.5 billion.
Income from trading fixed income rose 3% to $2.1 billion, and from trading stock by 6% to $1.2 billion.
Bank of America has allocated $1.4 billion for the establishment of reserves for possible loan losses compared to $5.1 billion in the second quarter.
The shares of Wells Fargo, which lost 54% since the beginning of the year, decreased by 4.2% after the publication of the results of the 3rd quarter (at the time of writing).
Wells Fargo reported a drop in profits per share of 54% to $0,42, that $0.03 worse than the analyst estimate of $0,45.
Revenue fell 14% to $18.9 billion., however, this is above the average analysts ‘ forecast of $17,97 billion to See the quarterly history of revenue and profit Wells Fargo for the last 2 years can link.
Wells Fargo reduced the amount allocated per quarter to reserve for possible losses from defaults on loans to $769 million, after allocation of $9.5 billion in the second quarter.
The price of the shares of the largest U.S. banks will depend on future trends in the U.S. economy, but also adoption by Congress of a package of incentives to help the industries, and unemployed Americans during a pandemic.