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  • Wall Street traders had a good year in 2020 and nowhere better than a Goldman Sachs.

  • The firm run by David Solomon reported fourth quarter earnings on Tuesday, and they were up 13% for the year, where rivals like JP Morgan, Citigroup and Wells Fargo that all reported the previous week saw profits slump.

  • Why?

  • Well, it's because Goldman is driven mostly by stock and bond trading revenue.

  • On one of the financial side effects of covert 19 was big swings in the market that benefited companies that trade securities.

  • Goldman makes well over half of its revenue from markets, are also advising on deals on underwriting stock and bond issues, all of which group pretty strongly in 2020.

  • And if it hadn't been for a gigantic fine that Goldman paid over its role in a global bribery scandal in Malaysia, it would have had the best return on equity since 2000 and nine.

  • One thing that really sets Goldman apart is that while it's theoretically a bank, it doesn't do much actual banking in the way that you and I would think about it.

  • Interest on making loans only makes around $1 of every 10 that Goldman brings in.

  • Where is it big lenders like J.

  • P.

  • Morgan and Bank of America?

  • That's closer to $5 for every turn.

  • Right now, that's a bit of a burden because customers don't want to borrow and interest rates are going down.

  • So some of all this, meanwhile, is just lucky timing.

  • David Solomon actively wants to see Goldman over time, get deeper into retail banking on In the past, Goldman has even set out to reduce its reliance on trading revenue because it's so choppy.

  • But for now, Goldman looks pretty much fine just the way it is.

Wall Street traders had a good year in 2020 and nowhere better than a Goldman Sachs.

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Breakingviews TV: Goldman age

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    林宜悉 posted on 2021/01/21
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