Goldman Sachs Reported Better than Expected Results

On Wednesday, New York-based bank released information about the second-quarter earnings. Notably, earnings surpassed expectations as its reliance on trading and investment helped to mitigate problems caused by the coronavirus pandemic. In the second quarter, Goldman Sachs generated $2.42 billion in profit or $6.26 a share.

Importantly, this result surpassed expectations. Analysts expected a profit of $3.78 a share. Furthermore, it was the bank’s biggest earnings outperformance in nearly a decade.

Also, the revenue of $13.3 billion exceeded expectations. As stated above, strong results in its trading and investment banking divisions, which made up three-quarters of the firm’s revenue in the period, helped New York-based bank.

According to CEO David Solomon, he is confident that Goldman Sachs will continue to be the firm of choice around the globe, despite challenges.

Goldman Sachs and coronavirus pandemic

Interestingly, of the six biggest banks, Goldman Sachs gets the largest share of its revenue from Wall Street activities, including trading and investment banking. However, for the last several years its reliance on trading and investment banking was an obstacle for the firm. At that time, retail banking was a contributor to the industry’s record profits.

However, Goldman’s model proved to be more successful. As a reminder, retail banks started to allocate billions of dollars for loan losses.

Importantly, bond trading revenue jumped almost 150% to $4.24 billion. Moreover, the equities trading revenue rose 46% to $2.94 billion. Notably, after taking into account both bonds and equities trading, the trading division produced roughly $2.5 billion more than expected.

Furthermore, investment banking revenue gained 36% to $2.66 billion. This result also surpassed expectations.

Let’s have a look at Goldman’s asset management division. In the second quarter, revenue fell 18% to $2.1 billion due to lower gains from private equity holdings.

Hopefully, the bank’s consumer and wealth management division saw gains in the second quarter. The revenue increased by 9% to $1.36 billion.