Major US Banks Show Mixed Q3 Results... Trading Performance Rises Amid Volatility

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] While major Wall Street banks in the U.S. have experienced mixed results for their third-quarter earnings, they have maintained relatively stable conditions by generating profits despite the impact of the novel coronavirus (COVID-19). Due to increased market volatility, all banks posted higher-than-expected earnings in their trading divisions.

According to the Wall Street Journal (WSJ) and others on the 14th (local time), Goldman Sachs announced that its third-quarter net profit reached $3.62 billion (approximately 4.2 trillion KRW), doubling compared to the same period last year. Earnings per share were $9.68, significantly surpassing the $5.57 consensus estimate compiled by market data provider Refinitiv.

Revenue rose 29.5% year-over-year to $10.78 billion. Particularly, the trading division alone generated a net profit of $4.55 billion, a 29% increase from the previous year, with bond trading contributing $2.5 billion in net profit. JP Morgan and Citigroup, which released their third-quarter results earlier, also reported net profits from trading up 30% and 17%, respectively.

Bank of America (BOA) reported a third-quarter net profit of $4.88 billion, down 16% from the same quarter last year. Earnings per share were 51 cents, exceeding the 49-cent consensus estimate by financial data firm FactSet. Total revenue was $20.34 billion, an 11% decrease from a year ago, but trading division net profit increased 4% to $3.34 billion.

Brian Moynihan, CEO of BOA, stated, "We are seeing economic fundamentals returning," but added, "However, the economy will not reach normal levels until the health crisis and its resulting impacts are fully resolved."

Wells Fargo Bank, which also announced its earnings that day, posted a third-quarter net profit of $2.04 billion, down 56% year-over-year. Although this was an improvement from the $2.38 billion net loss recorded in the second quarter, the earnings per share of 42 cents fell short of the 45-cent consensus estimate, disappointing the market.

The WSJ commented, "Despite the pandemic and recession, Wall Street is still generating profits," noting that major U.S. banks maintain profitability even amid near-zero interest rates. It added, "Unlike during the 2008 global financial crisis, banks appear safe even if excessive leverage and cash withdrawal incidents occur."

This content was produced with the assistance of AI translation services.