Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

US bank earnings continued with Goldman Sachs and Bank of America (BofA) reporting earnings on Tuesday. Goldman beat expectations on most fronts while BofA’s earnings were mixed. Goldman reported an EPS of $12.08 for the quarter and $24.74 annually, the second highest annual EPS by the firm ever. Investment banking revenues surged 27%, with record equity revenues, up 40% and fixed income revenues up 6%. Common Equity Tier 1 (CET1) ratio increased 140bp during the year to 14.7%. The board also declared a dividend of $1.25/share to be paid on March 30, 2021. Global core liquid assets averaged $283bn for 2020, compared to an average of $234bn for 2019. The bank noted a net increase in provisions for credit losses of $293mn, citing the need for reserves for credit card loan growth.

BofA reported an EPS of $0.59 for the quarter with net interest income down 16% driven by lower interest rates. Common Equity Tier 1 (CET1) ratio increased 76bp during the year to 11.9%. The board also declared a dividend of $1.25/share to be paid on March 30, 2021. Global core liquid assets rose by $367bn or 64% in 2020 to $943bn. The bank said it released $828mn in reserves, resulting in a $53mn provision for credit losses in the final quarter. Nonperforming loans (NPLs) increased $402mn, or 9%, from the prior quarter to $5bn, driven by consumer real estate on the back of deferrals.

Goldman’s 5% Perps were flat at 100.35, yielding 4.8% while BofA’s 4.3% Perps were also flat at 103.29, yielding 3.42%.

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