The big American banks with a sharp drop in profits

Three of the major US banks, Morgan Stanley, Goldman Sachs, and Citigroup, announced a sharp drop in their profits in the first quarter of the year, Reuters reported.

He is the biggest at Goldman Sachs – nearly 50 percent, almost as much at Citigroup – 46 percent, while Morgan Stanley reported a decline of 11 percent.

Although Goldman Sachs announced a serious drop in profits, the bank’s results are better than previously expected. Overall, revenues fell by 27 percent. The company’s net income for the first quarter, applicable to ordinary shareholders, was $ 3.83 billion or $ 10.76 per share, compared to $ 6.71 billion or $ 18.60 per share last year.

The bank’s total non-interest income fell to $ 11.1 billion from $ 16.2 billion in the previous period. Net interest income was $ 1.83 billion, up from $ 1.48 billion a year earlier.

Citigroup saw a 46 percent drop in profits, largely due to its strong exposure in Russia. Most global US banks added $ 1.9 billion to their reserves during the quarter to prepare for losses from direct exposures in Russia and the economic impact of the war in Ukraine.

That boosted credit spending to $ 755 million, in contrast to $ 2.1 billion a year ago when it released reserves for losses created during the Kovid-19 pandemic.

The bank said it had reduced its exposure to Russia to $ 7.8 billion from $ 9.8 billion in December. If the conflict deepens, the bank will lose no more than $ 3 billion, not nearly $ 5 billion, as estimated last month.

Net income for the quarter fell to $ 4.3 billion, or $ 2.02 per share, from $ 7.94 billion, or $ 3.62 per share a year ago.

Morgan Stanley’s quarterly earnings fell to $ 3.54 billion, or $ 2.02 a share, from $ 3.98 billion, or $ 2.19 a share, a year earlier. Analysts expected the bank to report earnings of $ 1.68 per share, according to Refinitiv.

The World Bank predicts a 45 percent collapse in the Ukrainian economy and a sharp recession in Russia

Due to the war, the World Bank expects Ukraine’s economy to shrink by 45% this year. The economic damage will be greater than that caused by the Covid-19 pandemic in Eastern Europe and Central Asia, and unprecedented sanctions will lead to a sharp recession in Russia as well, the institution said.

Following the Russian aggression in late February, much of Ukraine’s labor force was forced to flee or fight at the front. Businesses have been closed and roads, factories, and other infrastructure destroyed, and according to the World Bank, years of progress have been ruined.

Ukraine was a major source of cereals such as sunflower and wheat, but after the cessation of exports, world food prices rose and Ukraine lost one of its most important sources of income.

Sanctions against Russia mean that the World Bank forecasts that the country’s economy will shrink by more than 11% this year.

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