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Goldman Sachs, America's largest investment bank reported much stronger than expected second quarter earnings before the bell Wednesday. $GS bond trading revenue surged almost 150% to $4.24 billion, and equities trading revenue rose 46% to $2.94 billion.

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Goldman Sachs Group Inc NYSE: GS Reported Before Open Wednesday

$6.26 Beat $3.78 EPS and $13.30 Bil Beat $9.80 Billion Forecast in Revenue

Earnings

Goldman Sachs said it generated $2.42 billion in profit in the second quarter, or $6.26 a share, well ahead of the $3.78 a share estimate of analysts surveyed by Refinitiv. Revenue of $13.3 billion was more than $3.5 billion higher than the estimate, fueled by strong results in its trading and investment This was the second-highest ever for the firm and up 41% from a year earlier. Fixed income trading revenue came in at $4.24 billion, the highest in nine years. Equities trading revenue was $2.94 billion, the best quarter in 11 years. Investment banking revenue was a record $2.66 billion.

Goldman Sachs Group Inc NYSE: GS

Market Reaction > Pre-market 225.38 +11.37 (+5.31%)

Highlights

  • Bond trading revenue rose nearly 150% to $4.24 billion
  • Equities trading revenue rose 46% to $2.94 billion.
  • Together the trading division produced roughly $2.5 billion more than expected.
  • Investment banking revenue climbed 36% to $2.66 billion, about $550 million more than expected.
  • The spreads between buyers and sellers widened in the quarter, benefiting Goldman
  • Investments in electronic trading platforms also continued to pay off, helping the bank gain market share, GS said.
  • Asset management division revenue fell 18% to $2.1 billion with lower gains from private equity holdings, which was only partially offset by higher gains in the shares of public companies.
  • Consumer and wealth management division, revenue climbed 9% to $1.36 billion, fueled by higher management fees and loans from the firm’s Apple Card partnership.
  • GS set aside another $1.59 billion for potential credit losses due to the coronavirus

GS Earnings Q2 20

Outlook

“While the economic outlook remains uncertain, I am confident that we will continue to be the firm of choice for clients around the world,” CEO David Solomon said in the release.

 

Last year the Federal Reserve restricted the payout plans of  $GS after the bank's numbers they submitted for annual stress tests fell below Fed targets. The Fed opted not to fail the bank regardless, instead giving them a "conditional" pass.

Source: Goldman Sachs, AlphaStreet


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