Profit at Goldman Sachs Group Inc jumped amid a merger boom, while JPMorgan Chase & Co’s results were boosted by the impact of the recovering US economy on loan quality, according to results released on Tuesday.
The financial heavyweights reported soaring second-quarter profit compared with the previous year, when large banks set aside massive reserves in case clients defaulted amid the COVID-19 downturn.
However, widespread access to COVID-19 vaccines and the accelerating reopening of the US economy have put those days in the rearview mirror.
Photo: Reuters
At JPMorgan, which has a significant retail operation in addition to investment banking, combined debit and credit card spending was up 45 percent from the previous year and more than one-fifth higher than in the pre-pandemic 2019’s second quarter, JPMorgan chief executive Jamie Dimon said.
He highlighted “exceptionally strong” consumer and business balance sheets.
However, the much sunnier outlook includes some continued question marks surrounding the course of the pandemic.
The rapid spread of the Delta variant of SARS-CoV-2 is one factor creating “elevated uncertainty” about the bank’s outlook for “a very robust recovery,” JPMorgan chief financial officer Jeremy Barnum said.
Goldman Sachs chief executive David Solomon also cited the pandemic as a potential source of economic trouble, noting this month’s tightening of restrictions in Hong Kong and Australia.
Vaccine coverage “is not consistent across communities and nations, including parts of the United States,” Solomon said on a conference call with analysts. “Widespread vaccine distribution and high vaccine rates are critical to open and thriving economies.”
The biggest US bank by assets, JPMorgan began the earnings season for the sector, reporting that profit more than doubled to US$11.9 billion in the second quarter, including a boost from US$3 billion that had been set aside as reserves.
JPMorgan had budgeted US$8.9 billion for bad loans in the second quarter last year, but it reported just US$734 million in charge-offs for defaults in the second quarter this year.
However, revenue for the period fell 8 percent to US$30.5 billion, as the bank’s trading business saw much less activity compared with the previous year.
Bank executives also expressed little optimism about loan growth, given the healthy state of US consumer finances following government stimulus programs.
Loan growth is going to be “a little bit of a slog through the rest of this year,” Barnum told reporters.
While “unusually high” pay rates for credit cards are “a healthy thing for consumers, it does create a bit of a headwind for our loan growth,” he said.
JPMorgan posted record global investment banking fees of US$3.6 billion in the second quarter, driven by heavy merger and acquisition activity.
At Goldman, profit came in at US$5.3 billion in the second quarter, compared with US$197 million the previous year, when results were dented not only by provisions for bad loans, but from elevated legal costs.
Revenue was US$15.4 billion, a 16 percent increase and the second-highest quarterly revenue in the firm’s history after the first three months of this year.
Goldman’s results reflected a jump in financial advisory revenue due to a rise in completed mergers and acquisitions.
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
PRICE HIKES: The war in the Middle East would not significantly disrupt supply in the short term, but semiconductor companies are facing price surges for materials Taiwan’s semiconductor companies are not facing imminent supply disruptions of essential chemicals or raw materials due to the war in the Middle East, but surges in material costs loom large, industry association SEMI Taiwan said yesterday. The association’s comments came amid growing concerns that supplies of helium and other key raw materials used in semiconductor production could become a choke point after Qatar shut down its liquefied natural gas (LNG) production and helium output earlier this month due to the conflict. Qatar is the second-largest LNG supplier in the world and accounts for about 33 percent of global helium output. Helium is
About 1,000 participants, including more than 200 venture capitalists, joined the Taiwan Demo Day in Silicon Valley on Saturday, the largest iteration to date of the event held ahead of Nvidia Corp’s annual GPU Technology Conference which runs from today to Thursday. Taiwan Demo Day, co-organized by the Taiwan Next Foundation and the Startup Island Taiwan Silicon Valley Hub, took place at the Computer History Museum in California, showcasing 12 teams focused on physical artificial intelligence (AI) and agentic AI technologies. Katie Hsieh (謝凱婷), founder of the Taiwan Next Foundation, said the event highlighted the strength of the Taiwan-US start-up ecosystem, with
DOMESTIC COMPONENT: Huang identified several Taiwanese partners to be a key part of Nvidia’s Vera Rubin supply chain, including Asustek, Hon Hai and Wistron Nvidia Corp chief executive officer Jensen Huang (黃仁勳), addressing crowds at the company’s biggest annual event, unveiled a variety of new products while predicting that its flagship artificial intelligence (AI) processors would help generate US$1 trillion in sales through next year. During a two-and-a-half-hour keynote address, Huang announced plans to push deeper into central processing units (CPUs) — Intel Corp’s home turf — and introduced semiconductors made with technology acquired from start-up Groq Inc. The company even said it was developing chips for data centers in outer space. At the heart of Huang’s speech was the message that demand for computing power
RSS