Goldman Sachs beats profit forecasts to defy coronavirus
Goldman Sachs today revealed quarterly profit has smashed forecasts, driven by the strength of its core bond trading and underwriting businesses.
The Wall Street bank earned as much in the second quarter of 2020 as it did a year earlier, seemingly defying the global pandemic.
A strong showing in bond trading helped to offset a surge in loan loss provisions and legal charges.
Goldman’s shares jumped around five per cent in pre-market trading.
The figures
Goldman Sachs reported net income of $2.42bn (£1.92bn), unchanged from a year earlier.
Earnings per share of $6.26 beat analysts’ predictions of $3.78, as it benefited from a 150 per cent surge in fixed income trading revenues.
Net revenue jumped 41 per cent year on year to $13.3bn, marking the bank’s second highest quarterly net revenues.
Why it’s interesting
Goldman Sachs’ fixed income dibision generated quarterly net revenues of $4.24bn, its best performance in nine years which Goldman said reflected “continued strong client activity in intermediation and financing”.
The equities division reported its best quarterly performance in 11 years, by increasing revenues 46 per cent year-on-year to $2.94bn. Revenues in investment banking were up 36 per cent.
Provision for credit losses came in at $1.59bn for the second quarter, compared with $214m in the same period last year.
The bank said it was primarily due to “significantly higher provisions related to wholesale loans” and to a lesser extent, consumer loans.
What Goldman Sachs said
Chief executive David Solomon said: “Our strong financial performance across our client franchises demonstrates the inherent benefits of our diversified business model. The turbulence we have seen in recent months only reinforces our commitment to the strategy we outlined earlier this year to investors.
“While the economic outlook remains uncertain, I am confident that we will continue to be the firm of choice for clients around the world who are looking to reshape their businesses and rebuild a more resilient economy.”