May God Protect Our Bottom Lines
Return on equity plunged 373bps in 2020, closing the year at 14.6%. That, Goldman's David Kostin wrote, in his latest, was the lowest since 2016.
Most of the collapse was down to margin compression. EBIT margins exhibited the most pronounced YoY decline since 2009.
"Margin pressure due to the pandemic accounted for 351bps of the total decline in ROE contraction," Kostin went on to say. As it turns out, record-low taxes and borrowing costs are no profitability panacea during a pandemic (figure
