Goldman Sachs on Monday reported better-than-expected profit and revenue due to better-than-expected bond results and lower-than-expected provisions for loan losses.
Here’s what the company reported:
- Revenue: $8.62 per share (LSEG expects $8.34 per share)
- Revenue: Estimated at $12.73 billion vs. $12.46 billion
Goldman Sachs said second-quarter profit rose 150 percent to $3.04 billion, or $8.62 a share, from a year earlier after the bank’s results were marred by commercial real estate impairments and the sale of its consumer business.
Company-wide revenue rose more modestly, up 17% to $12.73 billion, driven by growth in the bank’s core trading, advisory and asset and wealth management businesses.
The fixed income division was the highlight of the quarter, as revenues rose 17% to $3.18 billion, about $220 million above Street account estimates, driven by activity in interest rate, currency and mortgage trading markets.
Another boost for Goldman was the bank’s reduction in its exposure to consumer loans: The bank’s reserves for credit losses fell 54% to $282 million in the quarter, well below the $435.4 million estimated for Street accounts.
Elsewhere, the bank performed in line with expectations. Equity trading, for example, rose 7 percent to $3.17 billion on strong derivatives trading, in line with expectations from Street accounts.
The bank’s asset and wealth management division saw revenue rise 27% to $3.88 billion, also in line with Street accounts’ estimates, thanks to gains on equity investments and higher management fees.
Revenue from the company’s Platform Solutions segment rose 2% to $669 million, beating expectations of $652.1 million, driven by growth in credit card balances and deposits.
But Goldman’s renowned investment banking business underwhelmed compared to its competitors. Investment banking fees rose 21% to $1.73 billion, just below the $1.8 billion expected by Street accounts. The drop in expectations was likely due to weaker advisory fees, coming in at $688 million compared to an expected $757.3 million.
Goldman’s investment-banking fees rose 21% in the quarter, while fees for both divisions rose more than 50%. JPMorgan Chase and CitigroupJPMorgan, in particular, noted that stronger activity towards the end of the period helped boost its results.
Goldman Sachs Chief Financial Officer Dennis Coleman told reporters that the bank still ranks No. 1 in market share for mergers, due to its strong relative performance a year ago.
Shares of New York-based Goldman fluctuated between gains and losses of less than 1 percent in premarket trading.
Expectations for Goldman Sachs are rising as Wall Street businesses are in the midst of recovering from a slump in 2023. That’s because, of the six biggest U.S. banks, Goldman relies the most on investment banking and trading to generate revenue.
On Friday, rivals JPMorgan and Citigroup both beat expectations, helped by a surge in investment banking fees and better-than-expected stock trading results.
Bank of America and Morgan Stanley We will report the results on Tuesday.
This story is developing, please check back for updates.
