Goldman Sachs‘ (GS.N) profit more than doubled in the second quarter, surpassing analysts’ expectations due to strong debt underwriting and fixed-income trading.
However, this marked a decline from the previous quarter’s peak earnings, the highest since 2021.
The robust U.S. economy has encouraged corporate executives to engage in acquisitions, debt sales, and stock offerings.
“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,” said CEO David Solomon.
For the three months ending June 30, Goldman reported earnings of $3.04 billion, or $8.62 per share, which was about 3% higher than analysts’ average expectation of $8.34.
This beat was narrower compared to the previous two quarters when Goldman’s profit exceeded estimates by 35% and 56%.
The stock saw marginal gains in volatile premarket trading. Stephen Biggar, an analyst at Argus Research, noted the stock’s performance was due to the narrow beat and underperformance in investment banking compared to peers like JPMorgan Chase (JPM.N) and Citigroup (C.N).
Goldman’s investment banking fees increased by 21% to $1.73 billion in the quarter.
Fees from mergers and acquisitions (M&As) rose 7%, while debt and stock underwriting surged 39% and 25%, respectively.
In comparison, JPMorgan and Citigroup reported significant jumps in investment banking revenue last week.
Last year, Goldman’s second-quarter profit was impacted by writedowns related to GreenSky, a former fintech business now sold.
Refocusing on investment banking and trading after a failed consumer banking venture, Goldman has gained investor support, with its stock up 24.4% this year, compared to Morgan Stanley’s (MS.N) 11.6% and JPMorgan Chase’s 20.5%.
Revenue from fixed income, currency, and commodities (FICC) trading increased by 17%, driven by a 37% rise in FICC financing to $850 million, just below the first quarter’s record $852 million.
Equities trading revenue also grew by 7%.
The asset and wealth management unit, which oversees $2.93 trillion, reported a 27% revenue increase and recently secured a deal to manage UPS’s $43.4 billion pension fund portfolio.
Goldman’s provisions for credit losses were $282 million for the second quarter, down from $615 million a year earlier.
The bank took a $58 million charge on the General Motors (GM.N) credit card business, preparing to exit the partnership.
Goldman plans to retreat from retail banking, selling the GM card loan portfolio and facing an uncertain future with its Apple (AAPL.O) partnership.
Despite challenges, Goldman increased its quarterly dividend to $3 per share from $2.75.