Goldman Sachs tops estimates on better-than-expected fixed income trading

 

 

Goldman Sachs said Monday that it topped profit and revenue estimates on better-than-expected fixed income results and smaller-than-expected loan loss provisions.

Here’s what the company reported:

Earnings: $8.62 per share vs. $8.34 per share LSEG estimate
Revenue: $12.73 billion vs. $12.46 billion estimate
Goldman said second-quarter profit jumped 150% from a year earlier to $3.04 billion, or $8.62 per share; the bank’s results a year ago were hamstrung by write-downs tied to commercial real estate and the sale of a consumer business.

Companywide revenue rose a more modest 17% to $12.73 billion on growth in the bank’s core trading, advisory, and asset and wealth management operations.

Fixed income was a highlight for the quarter; revenue there jumped 17% to $3.18 billion, roughly $220 million more than the StreetAccount estimate, on activity in interest rate, currency and mortgage trading markets.

Another boost for Goldman came thanks to the firm’s shrinking exposure to consumer loans: The bank’s provision for credit losses in the quarter fell 54% to $282 million; that is significantly below the $435.4 million StreetAccount estimate.

In other places, the bank was merely in line with expectations; for instance, equities trading climbed 7% to $3.17 billion, matching the StreetAccount estimate, on strength in derivatives activity.

The bank’s asset and wealth management division produced a 27% increase in revenue to $3.88 billion, also essentially matching the StreetAccount estimate, on gains in equity investments and rising management fees.

The firm’s platform solutions division saw revenue climb 2% to $669 million, edging out the $652.1 million estimate, on rising credit card balances and deposits.

But Goldman’s well-known investment banking business disappointed compared to rivals; investment banking fees rose 21% to $1.73 billion, slightly under the $1.8 billion StreetAccount estimate. The source of the miss appeared to be lighter-than-expected advisory fees of $688 million, compared with the $757.3 million estimate.

Goldman’s 21% increase in investment banking fees in the quarter compared with jumps of over 50% for both JPMorgan Chase
 and Citigroup
; JPMorgan in particular cited a flurry of activity toward the end of the period that boosted results.

Goldman CFO Denis Coleman told reporters that the bank still had a No. 1 market share for mergers and the comparison had to do with better relative performance a year ago.

Shares of New York-based Goldman were up more than 1% in midday trading.

Expectations have been set high for Goldman Sachs, with Wall Street businesses in the midst of a rebound after a dismal 2023. That’s because out of the six biggest U.S. banks, Goldman is the most reliant on investment banking and trading to generate revenue.

On Friday, rivals JPMorgan and Citigroup both topped expectations thanks to surging investment banking fees and better-than-expected equities trading results.

Bank of America
 and Morgan Stanley
 report results Tuesday.