Goldman Sachs has cashed in on the coronavirus trading frenzy after reporting a 94pc jump in profits for the three months to September.
The bank has joined fellow Wall Street financial powerhouses JPMorgan and BlackRock in beating analyst estimates and reporting bumper third-quarter profits, despite the pandemic triggering an economic downturn that has left many households significantly poorer.
Goldman, which relies heavily on its investment banking and trading desks, said profits had shot up to $3.6bn following a 29pc spike in trading revenues and a 7pc boost in investment banking versus a year ago.
The bank has made money throughout the crisis. Its latest set of results follows a near-record second quarter as market volatility caused by coronavirus triggered a trading boom. The lender has a smaller consumer banking arm than its rivals making it less exposed to losses from unpaid loans.
Chief executive David Solomon, who earlier this month reportedly sold his sprawling 83-acre mansion in Aspen, Colorado for $26.5m, said things were looking up for the rest of the year too.
"As our clients begin to emerge from the tough economy brought on by the pandemic, we are well positioned to help them recover and grow, particularly given market share gains we’ve achieved this year," he said.
A brutal April-June quarter sent the US economy contracting by a record 9.4pc, forcing American banks to put more than $33bn (£25bn) aside to cover for potentially toxic loans. However, a recovery in the US economy in the third quarter means that banks are so far putting less aside for loan loss provisions.
That does not mean US banks are cashing in, however. Third quarter results for Wells Fargo and Bank of America, which also reported on Wednesday, told a very different story as profits fell a respective 56pc and 15pc. Both banks have put aside billions to cover the cost of bad debt this year and are being squeezed by low interest rates.
"A very different tale of three banking giants unfolded before the opening bell on Wall Street as Wells Fargo and Bank of America rang up the cost of bad debt while Goldman Sachs waltzed ahead with a trading upswing," said Susannah Streeter at Hargreaves Lansdown.
"If the economic recovery continues and more Americans find work, there is hope defaults will decrease. But that is far from guaranteed, given how the virus is still continuing to spread, disrupting sectors across the board, and the banks could still find themselves in a sticky situation if the economy takes a turn for the worse."
UK banks report their third quarter results later this month.