Goldman Sach’s Trading Revenue Exceeds Expectations
(16 July 2020 – United States) Goldman Sach’s trading revenue has exceeded expectations in Q2 2020 – reaching nearly double initial estimates.
The main reason for the bank’s trading success has have been largely due to the astronomical swings in equity and bond markets which the bank has managed to capitalise on.
Goldman Sachs have much lower levels of exposure to high risk loans compared to rival banks like JPMorgan and Citigroup, but the bank is strongly reliant on financial market trading. Fortunately, this has served in the bank’s favour.
Although Goldman Sachs enjoyed healthy returns in the second quarter, the bank has set aside US$1.6 billion in provisions for the impact of an extended COVID-19 induced recession. It also has set aside an additional US$945 million for litigation and regulatory proceedings following the bank’s involvement in the 1Malaysia Development Berhad (1MDB) scandal.
“Large price swings in financial markets can often act as a double-edged sword. On one hand, banks and institutions can harvest abnormal returns, and on the other hand occur severe losses” commented East & Partners Europe Market Analyst, Pierre Sokoya.