Goldman Sachs profit more than doubles to $3B as Wall Street dealmaking rebounds
Goldman Sachs’ profits spiked more than 150% in the second quarter to beat analyst predictions – but fell off from a bumper first quarter when earnings were the highest since 2021.
Goldman CEO David Solomon, who had been under fire over an exodus of top talent and failed business ventures into retail banking, saw the Wall Street giant benefit from strong debt underwriting and fixed-income trading.
“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,” Solomon said in a statement on Monday.
The resilience of the US economy has given corporate executives the confidence to pursue acquisitions, debt sales and stock offerings.
“We remain very well-positioned to benefit from a continued resurgence in activity,” said Solomon, who began a conference call with analysts by condemning the assassination attempt on former President Donald Trump.
While activity in capital markets and mergers is improving, it remains below historical averages, Solomon said.
Shares climbed nearly 3%, to $492.23 just off the firm’s all-time high of $493.
Earnings rose to $3.04 billion, or $8.62 per share, for the three months ended June 30, about 3% higher than analysts’ average expectation of $8.34 per share, according to LSEG.
Goldman is poised for higher earnings from investment banking fees given the significant increase in its backlog, Kenneth Leon, research director at CFRA Research and who has a buy rating on the stock, said in a note.
The results exceeded estimates by narrower margins than in the prior two quarters, when Goldman reported profit that was 35% and 56% higher than estimates.
Goldman’s investment banking fees rose 21% to $1.73 billion in the quarter. Fees earned from advising on mergers and acquisitions jumped 7%, while debt and stock underwriting climbed 39% and 25%, respectively.
On Friday, JPMorgan reported a 46% jump in investment banking revenue, which jumped 60% at Citigroup.
Goldman’s profit in the second quarter last year was also hit by writedowns related to GreenSky, a fintech business that Goldman has since sold.
After its foray into consumer banking flopped, Goldman has refocused on its traditional mainstays — investment banking and trading. This year marks the 25-year anniversary of Goldman’s initial public offering, the same year Solomon joined the firm.
Investors have supported Goldman’s attempt to refocus on its Wall Street operations, pushing the Wall Street titan’s stock up 24.4% this year. That compares with 11.6% at rival Morgan Stanley and 20.5% at JPMorgan.
Goldman Sachs oversees $2.93 trillion in assets – and it signed a deal in May to manage the $43.40 billion pension fund of shipping giant UPS.
The platform solutions division’s revenue increased 2% to $669 million, above estimates, on rising credit card balances and deposits.
The bank’s provisions for credit losses were $282 million for the second quarter – compared with $615 million last year.
Goldman Sachs took a $58 million charge on the General Motors credit card business as it prepares to exit the partnership. Goldman Sachs decided to sell the General Motors card loan portfolio last year.
The automotive manufacturer is in talks to replace Goldman with Barclay, a source told Reuters in April.
There have also been reports that Apple is pulling the plug on its credit card partnership with Goldman Sachs.
With Post wires
