Reserve

Chase and Goldman Sachs score record quarters, thanks to the IPO-palooza

Thursday, April 15, 2021 by Robinhood Snacks | Disclosures

Chase Sapphire Reserve... minus the reserves. Banks kicked off earnings season with jaw-dropping earnings. JPMorgan Chase and Goldman Sachs reported first — Citi, BoA, and Morgan Stanley are up next. A year ago, banks added billions in rainy day funds to their reserves. 17M Americans were newly unemployed, so banks set aside $$$ to prep for loan losses. Think: defaults on mortgages and biz loans. But economic healing happened faster than banks expected — and big loan losses never materialized. In fact...

  • Chase had a record quarter. Profit ~5X'd from 2020, coming in at a record $14.3B. JPM released $5.2B in loss reserves (which turned into profit).
  • Goldman had a record quarter. Revenue more than doubled from 2020 to $17.7B... and profit hit an all-time high, too.

Bankers dropping bangers... Your quarterly reminder that Goldman's CEO is an EDM DJ. The IPO boom also helped banks, big time. JPM's investment banking revenue more than tripled, while Goldman's i-banking revenue soared 73%. Corporate and investment banking made up nearly half of JPM's revenue last quarter, and most of Goldman's.

THE TAKEAWAY

Banks are selling shovels.. to the Wall Street gold rush. In the first quarter of the year, IPO companies raised a record $162B (compared to $37B in the first quarter of 2020). And SPACs have already raised more in 2021 than they did in all of 2020. Banks are the ones making IPOs and SPAC mergers happen — and they're getting paid big bucks for underwriting and advising. Banks with big Wall Street arms (like Goldman and JPM) are cashing in the most.