US Big Banks results season: Goldman Sachs makes huge profit
But not all is rosy and the US’s most influential bank’s stock slid after the news. The problem was not how much they made, $3.03 billion, but how they made it: instead of coming from banks’ usual mainstay, investment banking, where revenues fell 31% from same time last year, the bulk of the profits came from trading and other speculative activities. Translation: there’s not much real new value created in the country right now and most of the money is being made in shuffling paper around. Investment banking would have fared even worse were there not a surge in share issues underwriting, where many companies decided to list as the investment money flows back into the markets. Such distribution of profits was bad news for the overall economy, so Goldman’s results pulled the markets down. One thing is soothing to Goldman shareholders, though: whatever the environment, they found a way to make money.