Top banks in the US saw profits plunge in 2020 due to the pandemic recession. Goldman Sachs, however, went against the grain with blowout quarterly earnings.
According to the research data analyzed and published by Finaria, Goldman Sachs is expected to report a 43% increase in profits in Q4 2020. Based on a Zacks Investment report, the consensus earnings per share (EPS) estimate for the quarter is $6.99, up from $4.69 in Q4 2019.
Per Bloomberg analyst estimates, the top six US banks could post a collective decline of 12% in Q4 2020 profits. Total profit for Q4 2020 is estimated at $24 billion.
Top US Banks Profit to Fall from $120 Billion in 2019 to $73 Billion in 2020
From a low of $3.11 in Q1 2020, Goldman Sachs’ EPS more than doubled to $6.26 in Q2 2020. In Q3, it rose further to $9.68. In Q2 2020, it got a performance boost from trading and investment banking, which accounted for 75% of revenue. Its trading revenue shot up by 93%, equity trading revenue by 46% and bond trading revenue by 150%. Investment banking revenue increased by 36% in the same quarter.
In Q3 2020, its profit nearly doubled to $3.5 billion and revenue rose by 30%, led by a 71% uptick in asset management. On January 19, 2020, Goldman Sachs stock, which is valued at $303, has risen by 46.34% within the past three months according to Marketwatch.
On the other hand, JP Morgan Chase is expected to post a 5% decline in Q4 2020 profits while Bank of America is estimated to suffer a 33% drop. Analysts project higher declines for Wells Fargo and Citigroup, at 39% and 42% respectively.
The above five banks plus Morgan Stanley are projected to post a combined profit of $73 billion in 2020. Comparatively, the six generated a record $120 billion in profit in 2019. The trading revenue of the banks, excluding Wells Fargo, is estimated at $20 billion for Q4 2020.