Bank’s Biggest Earnings Outperformance in Nearly a Decade

The coronavirus pandemic continues to dominate headlines. This is not surprising as it has created a lot of problems. In other news, this week, Goldman Sachs released information about the second-quarter earnings. Notably, Goldman Sachs generated $2.42 billion in profit or $6.26 a share, while analysts expected a profit of $3.78 a share.

Interestingly, the bank reported better than expected results. Their earnings exceeded expectations. Its reliance on trading and investment helped to deal with some of the problems created by the coronavirus pandemic.

Importantly, this was the New York-based bank’s biggest earnings outperformance in nearly a decade.

The revenue of $13.3 billion also surpassed expectations. Strong results in its trading and investment banking divisions helped to overcome the issues.

New York-based bank and financial results

People should not forget that, out of the six biggest banks, Goldman Sachs gets the largest share of its revenue from Wall Street activities.

Nevertheless, for the last couple of years, its reliance on trading and investment banking was an obstacle for Goldman Sachs. However, this model did still play a crucial role.

For example, retail banks started to allocate billions of dollars toward loan losses.

In the second-quarter, bond trading revenue soared by almost 150% to $4.24 billion. Also, the equities trading revenue rose by 46% to $2.94 billion. Importantly, after taking into consideration both bond and equities trading, the trading division was able to produce roughly $2.5 billion more than expected.

Additionally, investment banking revenue grew by 36% to $2.66 billion. This result also exceeded expectations.

However, the asset management division was not so lucky, as, in the second quarter, revenue fell by 18% to $2.1 billion due to lower gains from private equity holdings.

Additionally, the revenue of the bank’s consumer and wealth management division increased by 9% to $1.36 billion.

Last but not least, CEO David Solomon is confident that Goldman Sachs will continue to attract customers from around the globe.