By Liz Hoffman 

Goldman Sachs Group Inc.'s profit fell 46% in the first quarter, a three-month stretch when the coronavirus pandemic battered markets, companies and investors hoarded cash and the U.S. economy ground to a halt.

The Wall Street bank reported a quarterly profit of $1.21 billion, or $3.11 a share, down from $2.25 billion a year ago. Revenue of $8.74 billion was basically flat from the first quarter of 2019.

The results met muted expectations from Wall Street analysts but held up slightly better than rivals JPMorgan Chase & Co. and Wells Fargo & Co., which both reported steep declines in quarterly profits on Tuesday. Analysts polled by FactSet had expected earnings of $1.4 billion, or $3.11 per share, on revenue of $8.3 billion.

The first three months of 2020 presented banks their most daunting challenges in more than a decade, with interest rates falling near zero and the global economy in freefall. Companies tapped their credit lines -- $144 billion in a single week in March alone, according to Morgan Stanley analysts -- an unprofitable and anxiety-producing development for their lenders.

JPMorgan Chase, the largest U.S. bank, reported a 69% drop in quarterly profits on Tuesday. Wells Fargo, another giant, reported an 89% drop.

Still, most of the pain for banks is yet to come. As a proxy for the economy, bank results tend to be lagging indicators of trouble. Nearly one-third of U.S. renters didn't make their April monthly payments, a move that will take a few weeks to ricochet through the mortgage market. Credit-card balances are likely to go unpaid, too.

JPMorgan and Wells Fargo socked away an extra $10 billion between them to cover expected loan losses. At Goldman -- a smaller firm whose roots are in Wall Street investment banking, not Main Street commercial banking -- that number was $937 million, nearly as much as the $1.07 billion it set aside in all of 2019.

Write to Liz Hoffman at liz.hoffman@wsj.com

 

(END) Dow Jones Newswires

April 15, 2020 07:52 ET (11:52 GMT)

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