GOLDMAN Sachs’ profit more than doubled in the second quarter, bolstered by debt underwriting and fixed-income trading, but results slipped from a bumper first quarter when the Wall Street giant reported its highest earnings since 2021.
The resilience of the US economy has given corporate executives the confidence to pursue acquisitions, debt sales and stock offerings.
“We are pleased with our solid second quarter results and our overall performance in the first half of the year, reflecting strong year-on-year growth in both Global Banking & Markets and Asset & Wealth Management,” CEO David Solomon said in a statement.
Earnings were US$3.04 billion, or US$8.62 per share, for the three months ended June 30, compared with US$1.22 billion, or US$3.08 per share, a year earlier, the bank said on Monday (Jul 15).
Profit in the year-ago quarter was also hit by writedowns related to GreenSky, its former fintech business that Goldman has since sold.
Investment banking fees rose 21 per cent to US$1.73 billion in the quarter. Fees earned from advising on mergers and acquisitions (M&As) jumped 7 per cent, while debt and stock underwriting climbed 39 per cent and 25 per cent, respectively.
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Revenue from fixed income, currency and commodities (FICC) trading rose 17 per cent, boosted by FICC financing, which makes loans to institutional investors and others. Equities trading revenue increased 7 per cent.
JPMorgan Chase and Jefferies Financial also recorded a strong performance in their investment banking divisions. Global investment banking revenue climbed 17 per cent to US$41.6 billion in the first half of the year, Dealogic data showed.
After a foray into consumer banking flopped, Goldman has refocused on its traditional mainstays – investment banking and trading.
Investors have supported the move, pushing the Wall Street titan’s stock up 24.4 per cent so far this year, compared with rivals Morgan Stanley’s 11.6 per cent gain and JPMorgan Chase’s 20.5 per cent climb.
Shares were last marginally down in volatile premarket trading.
The asset and wealth management unit, which manages money on behalf of wealthy and institutional clients, reported 27 per cent higher revenue in the second quarter.
The bank oversees US$2.93 trillion of assets. In May, it signed a deal to manage the US$43.4 billion pension fund portfolio of parcel delivery giant UPS.
Platform solutions, the unit that houses some of Goldman’s consumer operations, reported 2 per cent higher revenue.
The bank’s provisions for credit losses were US$282 million for the second quarter, compared with US$615 million a year earlier.
Credit cards
Goldman Sachs took a US$58 million charge on the General Motors credit card business in the second quarter as it prepares to exit the partnership. Goldman had decided to sell the GM card loan portfolio last year.
GM is in talks to replace Goldman with Barclays, a source familiar with the matter told Reuters in April.
A similar partnership Goldman has with tech giant Apple is facing an uncertain future.
Credit cards were an important facet of Goldman’s consumer strategy, but it decided to retreat from retail banking after big losses.
In its annual stress test, the Federal Reserve indicated credit cards could be a headache for banks. The potential losses on Goldman’s credit card loans were among the worst under the central bank’s hypothetical scenario.
Still, Goldman raised its quarterly dividend to US$3 per share versus US$2.75 earlier. REUTERS
