(Reuters) – Goldman Sachs Inc’s second-quarter profit more than doubled on strong debt underwriting and bond trading, but the gains were down from a strong first quarter in which the bank reported its highest profit since 2021.
The resilience of the U.S. economy has given corporate executives the confidence to pursue acquisitions, debt sales and public offerings.
“We saw strong year-over-year growth in both our Global Banking and Markets and Asset and Wealth Management segments and are pleased with our strong second quarter performance and overall performance for the first half of the year,” CEO David Solomon said in a statement.
The bank reported Monday profit of $3.04 billion, or $8.62 per share, for the three months ended June 30, down from $1.22 billion, or $3.08 per share, a year earlier.
Profits in the same period last year were also hit by impairments related to GreenSky, Goldman’s former fintech business, which it has since sold.
Investment banking fees rose 21% for the quarter to $1.73 billion. Fees earned advising on mergers and acquisitions rose 7%, while debt and equity underwriting rose 39% and 25%, respectively.
Fixed income, currencies and commodities (FICC) trading revenues increased 17% due to strength in FICC financing, which provides loans to institutional investors. Equities trading revenues increased 7%.
JPMorgan Chase & Co. and Jefferies Financial Inc. also posted strong results in their investment-banking divisions, whose global revenue rose 17 percent to $41.6 billion in the first half of the year, according to Dealogic data.
After a failed push into consumer banking, Goldman refocused on its traditional core businesses of investment banking and trading.
Investors have cheered the move, sending the Wall Street giant’s shares up 24.4% so far this year, compared with an 11.6% rise for rival Morgan Stanley and 20.5% for JPMorgan Chase.
Shares were last down slightly in choppy pre-market trading.
The asset and wealth management division, which manages money on behalf of high-net-worth individuals and institutional clients, reported a 27% increase in revenue in the second quarter.
The bank has $2.93 trillion in assets under management and in May signed a deal to manage UPS Inc.’s $43.4 billion pension fund portfolio.
Platform Solutions, part of Goldman’s consumer business, reported a 2% increase in revenue.
The bank’s second-quarter allowance for credit losses was $282 million, down from $615 million a year earlier.
credit card
Goldman Sachs recorded a $58 million loss on General Motors Co.’s credit card business in the second quarter as the bank prepares to dissolve its partnership with the automaker after deciding to sell its credit card portfolio last year.
The story continues
GM is in talks with Barclays to replace Goldman, a source familiar with the matter told Reuters in April.
A similar partnership Goldman has with tech giant Apple also faces an uncertain future.
Credit cards were a key aspect of Goldman’s consumer strategy, but the company decided to exit consumer banking after big losses.
The Federal Reserve has signaled in its annual stress tests that credit cards could pose a headache for banks, and the potential losses on Goldman’s credit-card loans are among the worst-case scenarios the central bank has envisioned.
Still, Goldman raised its quarterly dividend to $3 a share from $2.75.
(Reporting by Niket Nishant in Bengaluru and Syed Azhar in New York; Editing by Ranan Nguyen and Sreeraj Kaluvilla)