Goldman to swing to profit

Tim Wallace
Follow Tim
US BANKS are expected to report strong revenue figures this week, in part thanks to the boost to the mortgage market from the Federal Reserve’s latest round of money printing.

Goldman Sachs will report its third quarter results tomorrow, and is expected to turn 2011’s third quarter loss of $393m (£245m) into a solid profit this year.

The second quarter of 2012 saw the investment banking giant turn in a profit of $962m, which is expected to rise to over $1bn in the most recent three-month period.

The bank is one of many across the industry cutting costs in areas like staff and IT to shore up profits in a tough economic climate.

State Street will also report tomorrow, with Wednesday seeing Bank of America Merrill Lynch and BNY Mellon publishing their financials, alongside M&T Bank and Bancorp.

They follow JP Morgan and Wells Fargo, which kicked off the sector’s earnings season with strong financial reports last Friday.

JP Morgan’s profits jumped 34 per cent to a quarterly record of $5.71bn, driven by a 36 per cent rise in mortgage lending thanks to low interest rates and a recovering housing market.

Meanwhile Wells Fargo’s quarterly profits came in at a record $4.9bn, up 22 per cent on the same quarter of last year.

Analysts said a continued set of strong results could have an impact well beyond the US financial sector.

“This could provide a knock-on to the European banks which have already rallied strongly on the ECB and Fed pledge and intervention,” said Mike van Dulken from Accendo Markets.