Goldman Sachs earnings surge amid pandemic upheaval

NEW YORK - Goldman Sachs reported another blowout quarter Tuesday to conclude a highly profitable 2020 despite the coronavirus pandemic, which provided lucrative opportunities to the investment bank while battering much of the US economy.

Goldman's profits soared to $4.4 billion in the final quarter of the year, more than double the earnings from the same period a year ago, as it scored higher revenues in all four operating divisions and easily topped analyst estimates.

The just-ended quarter showed a continuation of the heady trends from Goldman's third quarter: more strength in equity and fixed-income trading amid financial markets volatility and huge growth in financial advising revenues as corporate clients pursued mergers or raised equity against a fast-changing macroeconomic backdrop.

And amid coronavirus-induced restrictions on movement, the financial giant saw lower travel and entertainment costs.

Chief Executive David Solomon praised the company's performance, but cautioned that the outlook for the global economy remains dependent on getting Covid-19 under control with a successful vaccination campaign.

"I urge political leaders at all levels and across all jurisdictions to do everything possible to implement a coordinated and comprehensive distribution plan," Solomon said during an earnings conference call. 

"In its absence, economic recovery will be unnecessarily delayed."

Several key economic sectors remain in deep trouble due to the prolonged downturn, including energy, airlines, hospitality and commercial real estate.

EYEING MAIN STREET GROWTH

Goldman enjoyed especially strong growth in fourth quarter revenues in investment banking, up 27 percent, and global markets, up 23 percent.

Overall revenues rose 18 percent from the year-ago period to $11.7 billion.

For all of 2020, Goldman Sachs reported profits of $8.9 billion, up 13 percent, on a revenue increase of 22 percent to $44.6 billion.

Goldman's results came on the heels of a series of mixed earnings releases Friday from rival financial heavyweights JPMorgan Chase, Citigroup and Wells Fargo.

Bank of America on Tuesday reported fourth-quarter earnings of $5.2 billion, down 23 percent from the year-ago period on a 10.5 percent drop in revenues.

Like JPMorgan and others that reported last week, Bank of America's results were boosted by an $828 million reserve release after earlier provisions for bad loans from coronavirus were not needed. 

However, Bank of America suffered a 16 percent drop in net interest income due to lower interest rates.

Goldman, which has a much smaller consumer-oriented business than those other large banks, ended up with a net increase in provisions for credit losses of $293 million, citing the need for reserves for credit card loan growth.

Goldman Sachs has been building up its consumer-oriented Marcus business since 2016, and Solomon indicated plans to continue to invest in the venture.

Goldman is getting ready to launch a new investment platform on Marcus that will permit individuals to put in as little as $1,000 through Goldman programs on asset allocation and exchange traded funds. 

Goldman is also preparing a new digital checking offering for later this year, Solomon said.

Solomon reiterated that Goldman is intent on building Marcus into a long-term business and will set the bar "extremely high" on acquisition targets.

Solomon said additional investments in the venture could delay the targets for the consumer business to reach profitability, but would not affect firm-wide financial targets.

Goldman shares fell 2.3 percent to $294.20 in early afternoon trading, while Bank of America fell 0.7 percent to $32.77. 

Analysts attributed the sell-off in part to a rise of more than 30 percent in leading bank shares in the prior two and a half months.

Agence France-Presse

Malaysia's Maybank Group profit down 8 pct in Q3

MANILA – Maybank Group, Malaysia's largest bank by assets, said its net profit for the third quarter of the year dipped 7.9 percent due to a slowdown in regional investment banking.

Maybank said its net profit from July to September dropped to RM1.61 billion ($481 million) from the RM1.75 billion ($523 million) posted in the same period last year.

Compared with the second quarter 2014, the third quarter’s net profit was 2.1 percent higher than the previous RM1.58 billion ($472 million).

“We were able to mitigate much of the impact by leveraging growth areas and managing costs, but were largely held back by a softer external environment such as the weaker regional investment banking climate and the slowdown in Indonesia,” said Maybank Chairman Tan Sri Megat ZaharuddinMegat Mohd Nor.

“We are hopeful that these will turn around in 2015 and we remain prepared to tap into the anticipated pick up in business opportunities then,” he added.

Meanwhile, Maybank Group president and chief executive Datuk Abdul Farid Alias said the first nine months of the year a challenging period for financial institutions in Malaysia to find growth.

“Owing to this, we focused on areas that we could control while taking the opportunity to strive for faster growth in selected business segments,” he said.

“At the same time, we made some investments for our future and will continue to follow this strategy for the remainder of the year, while preparing for 2015.”

For the nine months of 2014, the Maybank group saw a 2.9 percent decline in net income to RM13.45 billion.

Maybank’s international operations, meanwhile, saw a strong nine months with net income rising 5.9 percent to RM4.21 billion ($1.3 million).

As of September 2014, net income from international operations made up 35.7 percent of the Group’s income compared with 33.7 percent a year earlier, while gross loans made up 39.8 percent of Group loans from 37 percent a year earlier.

Maybank Philippines recorded a significantly better performance in the nine months, registering a 31.2 percent year-on-year increase in profit before tax to P636.4 million on the back of higher net interest income.

Gross loans grew 29.6 percent annualized or P8.3 billion attributable mainly to an increase in term loans.

Revenue for the period also rose 19 percent compared to a year earlier to P2.95 billion.

source: www.abs-cbnnews.com

Why Security Bank tapped Megan Young as endorser

MANILA, Philippines – Security Bank recently unveiled a new brand identity to impart the message of an improved retail banking service, its top official said on Friday.

Security Bank Corporation president and chief executive officer Alberto Villarosa said the rebranding exercise is part of its overall retail bank strategy, which has been its focus in the past few years.

“As early as 10 years ago when the new management team came in, we drafted a long-term strategic plan for the bank. We said we are very strong in the middle market, and so we leveraged on that and started building pieces of the banking strategy, moving to corporate and investment banking. At the same time, we were doing heavy treasury activities, which generated good earnings,” he told ABS-CBNnews.com at the sidelines of the Security Bank Economic Forum in Makati.

It was around 2009, Villarosa said, when the bank decided to boost efforts in getting a better share of the retail consumer.

“We went from 117 branches to now 244 branches. We shifted our orientation from operations to sales and marketing. We reprocessed a part of our operating procedures to make it less back office and more front office. And after all that is said and done, we now want to tell the market who we are,” he said.

The bank’s rebranding efforts involved changing its logo and its tagline to “You deserve better” from its previous slogan “Security you can bank on.”





“’Security you can bank on’ was very appropriate during that time because after the 1997 crisis, after the 2008 crisis, people were saying, ‘I want a bank that is secure.’ Because that was the focus then. Now, everybody assumes that all the banks are secure. So we went to the consumer and asked, ‘What do you want?’” Villarosa explained.

The results of the research done by the bank showed that a very small percentage of the market is satisfied with their current banking experience. Insights gathered boiled down to customers wanting to just simply get a better banking experience.

“It’s a very powerful tagline, but it is also very challenging because we have to deliver on the promise… It took us a lot of time to really say this is going to be our brand promise,” said Villarosa.

Why Megan?

Security Bank also tapped a new endorser in Miss World Megan Young, whom the bank describes as someone who “personifies grace and youthful exuberance.”

“She personified what the bank wants to be recognized as: world class,” Villarosa said.

In a statement, Young said banking became “very easy” when she switched to Security Bank.

“I like that the bank puts a premium on customer service. You can expect that even without a crown or a title, you will be treated like royalty because for Security Bank, you deserve better, you deserve only the best,” she said.





Villarosa also said the bank hopes that its new look will also appeal to the younger market or the "emerging affluent."

"The economic power of the younger generation is there," he said.

Villarosa added that the bank’s products in line with the new campaign will be focused on the asset management and consumer finance products, such as housing, mortgage loans, auto loans, personal lending, and credit cards, as well as investment products.

“The secret I would like to think of the success of the bank in the past has been on focus. We resisted the temptation 10 years ago to immediately go corporate banking, investment banking, treasury, retail and middle market all at one time. We said, ‘Let’s do it one at a time and focus on a specific direction,’” said Villarosa.

The bank is targeting to open 14 more branches by the end of 2014 to boost its network to more than 250 branches nationwide.

source: www.abs-cbnnews.com