Profit Jumps at Goldman Sachs and Bank of America

“The US economy continues to show consumer and business optimism, and our results reflect that.” – Brian Moynihan

Goldman Sachs Towers, New Jersey
Courtesy: shutterstock.com

Increased profits have been reported at two of the major U.S banks for the first quarter of the year, amid energy sector rebound and higher interest rates.

Profits at Goldman Sachs rose 80% from last year to $2.2bn, while Bank of America profits was up 44% from the same time last year; gains were seen across its major divisions.

Analysts were disappointed, however, by the performance of Goldman Sachs as there was a decline in revenues from institutional investors. Shares in the firm fell more than 3% after the market opened.

The CEO of Goldman Sachs, Lloyd Blankfein said:

“The operating environment was mixed, with client activity challenged in certain market-making businesses and a more attractive backdrop for underwriting in our investment banking franchise.”

Goldman said revenue for the first quarter was about $8bn. Although investment banking revenue rose 16%, its client services unit – the largest division in terms of revenue – declined 2% from the same three months last year.

Driven by higher pay, the total costs at the bank increased by 15%

Gains in the global banking unit helped in boosting profits at Bank of America in the first quarter. There was a 58% rise year-on-year due to record investment banking fees, which set the division’s net income at $1.7bn, and the total revenue increased 7% to 22.2bn.

Chief Executive Brian Moynihan said:

“The US economy continues to show consumer and business optimism, and our results reflect that.”

In the first quarter last year, the Bank of America – which serves around 46 million households – was hurt due to losses related to property and the energy industry. Although those losses have declined, the firm said that there had been a slight upward trend in credit card losses from the end of 2016.