Goldman Sachs reported strong second-quarter results, surpassing profit and revenue estimates. The company’s earnings per share were $8.62, higher than the estimated $8.34 per share from LSEG. Revenue also exceeded expectations, coming in at $12.73 billion compared to the $12.46 billion estimate.
The bank’s profit surged by 150% from the previous year, reaching $3.04 billion. This growth was attributed to better-than-expected fixed income results and smaller-than-expected loan loss provisions. The companywide revenue saw a modest increase of 17% to $12.73 billion, fueled by growth in the bank’s core trading, advisory, and asset and wealth management operations.
Fixed income emerged as a highlight for the quarter, with revenue jumping by 17% to $3.18 billion. This increase was driven by activity in interest rate, currency, and mortgage trading markets, surpassing the StreetAccount estimate by approximately $220 million.
A significant boost for Goldman was its reduced exposure to consumer loans, leading to a 54% decrease in the provision for credit losses to $282 million. This figure was well below the $435.4 million estimate from StreetAccount.
While some divisions performed exceptionally well, others were in line with expectations. Equities trading rose by 7% to $3.17 billion, matching the StreetAccount estimate. The asset and wealth management division saw a 27% increase in revenue to $3.88 billion, aligning with expectations.
Goldman’s investment banking business faced challenges, with fees increasing by 21% to $1.73 billion, slightly below the $1.8 billion estimate. The source of the discrepancy was lighter-than-expected advisory fees of $688 million, compared to the $757.3 million estimate.
Despite the challenges in the investment banking sector, Goldman CFO Denis Coleman highlighted the bank’s continued leadership in market share for mergers. He emphasized that the comparison with rivals was influenced by better relative performance a year ago, stating that consistent strong performance may result in more muted year-on-year changes.
Following the announcement of its second-quarter results, Goldman Sachs experienced fluctuations in premarket trading, with shares oscillating between gains and losses of less than 1%. Expectations remain high for Goldman, as the company heavily relies on investment banking and trading to generate revenue, especially in the current market environment of rebounding Wall Street businesses.
Goldman Sachs’ second-quarter performance showcased strengths in fixed income and asset and wealth management, while facing challenges in the investment banking sector. The bank’s ability to exceed profit and revenue estimates reflects its resilience and adaptability in the dynamic financial landscape.