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Wall Street Does Not Believe in Tears
US banks Goldman Sachs, Bank of America and Citigroup announced their third-quarter results last night. The banks reported growth in key indicators that exceeded analysts' forecasts. According to experts, the continued activity of investors and consumers suggests that the US economy can avoid a recession. But bankers urge us not to forget about the remaining elements of uncertainty, such as the situation in the Middle East and the upcoming US presidential election, the outcome of which is largely unpredictable.
Yesterday, the three largest US banks, Goldman Sachs (GS), Bank of America (BofA) and Citigroup, released their third-quarter results. Citi's quarterly profit fell 9% year-over-year to $3.2 billion, still beating analysts' expectations of $2.6 billion.
BofA's profit was $6.9 billion, down 12% from Q3 2023. Here, too, analysts had expected an even bigger decline (22%). The bank's total revenue was $25.5 billion, slightly above the $25.3 billion expected.
GS reported total sales of $12.7 billion in the third quarter, up 7% year-over-year, and net income of $3.75 billion, up 16% from the third quarter of 2023.
GS's core business saw strong growth. Debt-related fees were up 46% year-on-year, while investment banking operating fees were up 20%.
The bank notes that the growth of the indicator signals good activity among issuers and investors amid continuing uncertainty in the US economy.
"We are seeing a significant increase in activity from our clients," Goldman Sachs CEO David Solomon said at a press conference. "The continued cut in the Fed's interest rate increases hopes for a 'soft landing' (a slowdown after a period of rapid growth, not recession - Kommersant), which should stimulate economic activity."
Last Friday, another of Wall Street's Big Six banks, JPMorgan Chase (JPM), reported third-quarter earnings. Net income fell 2% to $4.37 per share, while total revenue rose 6% to $43.3 billion. The bank also beat analysts' expectations, reporting earnings of $4.01 per share and revenue of $41.6 billion.
According to analysts at Yahoo Finance, investment banking fees from GS, BofA, Citi and JPM totaled $6.5 billion in the third quarter, up 27% from a year ago and up 1% from the current second quarter.
Total transaction banking revenue in the third quarter reached $23.4 billion, up 6% year-over-year and up 3% from the second quarter of this year.
BofA CEO Brian Moynihan asked experts to pay particular attention to "year-over-year growth in investment banking, as well as asset management, retail sales and trading."
But bankers themselves are warning of factors that could impact the American and global economy this year. They include the situation in the Middle East and the presidential election in the United States. “The biggest challenge remains not only geopolitical uncertainty, but also the election situation,” said Citigroup Chief Financial Officer Mark Mason. “And we still need to know how this is going to play out.”