Banking: Big banks make $2.5B from tax cut
“Big banks just received the first installment of benefits” from the new corporate tax law, said Michael Rapoport in The Wall Street Journal. “The haul: more than $2.5 billion”—in just the first quarter. The combined earnings of Goldman Sachs, JPMorgan, Wells Fargo, Citigroup, and Bank of America grew by that much thanks to the lower corporate tax rate of 21 percent. Without the tax savings, Wells Fargo would have seen its earnings drop from the first quarter of 2017, “and much of the year-over-year growth at Citigroup and Bank of America would be gone.” Earnings growth at JPMorgan would have fallen to 28 percent instead of being 35 percent.
Goldman Sachs didn’t necessarily need the tax law to “get its groove back,” said Emily Flitter in The New York Times. The bank booked $10 billion in first-quarter revenue—a three-year high. Goldman also enjoyed a 23 percent bounce in its quarterly trading revenue. The bank spent much of last year lagging rivals, “trying to figure out how to rev up an operation feeling the pressure of new regulations and facing competition from non-bank trading platforms.” The latest results relieved insiders, especially as heir apparent David Solomon prepares to take over from longtime CEO Lloyd Blankfein sometime in the next two years.