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Goldman Sachs and Bank of America see profits soar due to higher interest rates

US banking giants Goldman Sachs and Bank of America have delivered a hefty jump in profits as they reaped the rewards of higher interest rates.

Bank of America clocked up a larger-than-expected profits rise, climbing 40% to 4.9 billion US dollars (£3.8 billion) for the first quarter.

Revenues stepped up 7% to 22.2 billion US dollars (£17.4 billion), as it cheered strong asset management flows and a rebound in investment banking fees.

It said net interest income lifted 5% to 11.1 billion US dollars (£8.7 billion), driven in part by the US interest rate rise, which has allowed lenders to charge more for their loans.

Chief executive Brian Moynihan said the bank's results reflect the consumer and business optimism within the US economy.

Goldman Sachs also saw profits grow by 80% to 2.2 billion US dollars (£1.7 billion) in the first quarter, but the performance fell short of analyst expectations.

The New York-based firm said i nvestment banking was up 16% to 1.7 billion US dollars for the period, while underwriting revenue soared by more than a third to 947 million US dollars (£742 million).

Goldman chairman and chief executive Lloyd Blankfein said the environment was "mixed" and client activity was "challenged".

JPMorgan Chase, Citigroup and Wells Fargo have all been boosted by higher interest rates after the US Federal Reserve hiked the cost of borrowing once in December and again in March.

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