20 years ago, Goldman Sachs used to be a Wall Street legend and a dream company to work for graduates with a financial degree. Over the last few years, the bank has been a loser with thousands of disappointed employees, managers, and investors. However, the other day Goldman Sachs made an attempt to get back in the game.
In particular, a 93% increase in the net profit amid a global pandemic leads us to belive that everything is really starting to change for Goldman Sachs. The bank's report for the third quarter of the year appears to have exceeded even the most positive expectations.
It's also interesting to note that the investment profit of the bank increased by 30% of the same reporting period. The consumer activity and bond trading gained 50% and 60% respectively.
These are stunning results, especially given the financial reports released by the bank's competitors. Probably, JPMorgan is the only bank that can boast a similar financial performance over the same period.
Despite multiple predictions, the borrowers didn't stop paying on time, the capital didn't slip away from certain assets or investment funds, and new companies didn't stop joining the market.
However, it was not the lending or consumption-related part of business that let Goldman Sachs generate stunning profits. It was the brokerage business, that once used to be the key business for Wall Street banks.
A 130% increase in the stock and derivative market turnover and a 65% increase in trading T-bond and corporate bonds - this is something that looks really impressive, NordFx experts say.
It's interesting to note that Goldman Sachs has been lagging behind their rivals in terms of risky loans and credit cards, which is something that may now allow the bank to take the lead.
International governments and central banks are currently making unprecedented market interventions, which means that the stock market is receiving the lion's share of those financial injections, and the funds are probably going to stay there for quite a while. With that being said, Goldman Sachs may become one of the key beneficiaries of this scenario.
Yesterday, the bank's stock was the only representative of the sector that closed the day in the green zone. Still, given the ratio between the profit and the revenue, the Goldman Sachs stock is still underpriced relative to the stocks of JPMorgan or Bank of America. If the forthcoming quarters turn out to be positive as well, the situation may well change in favor of Goldman Sachs.
