- Goldman Sachs reported second-quarter earnings on Wednesday morning that exceeded earnings and earnings analysts’ estimates.
- Quarterly revenue posted its second highest reading as commercial companies increased due to increased market volatility.
- Reserves for credit losses reached $ 1.6 billion as the company prepared for the consequences of the credit market.
- “Our strong financial performance in our customer franchises demonstrates the inherent benefits of our diversified business model,” said CEO David Solomon.
- Goldman’s shares gained as much as 4.1% in early trading.
- Watch the Goldman Sachs exchange live here.
Goldman Sachs announced second-quarter earnings on Wednesday that exceeded analyst expectations and provided the quarter’s first full look at its coronavirus pandemic hit.
The bank added $ 1.6 billion to its loan loss reserves during the period as credit health soured. Accumulation led to quarterly earnings falling 33% over the same period last year. However, investors analyzed the smaller-than-expected drop in earnings and focused on strong earnings across all trading operations.
Goldman’s shares rose as much as 4.1% in early Wednesday trading.
Here are the key numbers:
- Income: $ 13.3 billion, versus the estimated $ 9.71 billion
- Earnings per share: $ 6.26 per share, versus the estimate of $ 3.95
- Net Interest Income: $ 944 million, 12% less than a year ago
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“Our strong financial performance in our customer franchises demonstrates the inherent benefits of our diversified business model,” said CEO David Solomon. “While the economic outlook remains uncertain, I am confident that we will continue to be the company of choice for customers around the world looking to remodel their businesses and rebuild a more resilient economy.”
Goldman’s income is more concentrated in business and business advisory operations than any other major Wall Street bank. That approach helped the company offset loan loss pressures with strong performance across all its business divisions. Investment banking revenues reached a record $ 2.7 billion, 55% more than in the same period last year.
Equity income reached $ 2.9 billion, the highest in 11 years. Fixed income sales and trading generated $ 4.2 billion, its best reading in nine years, as the wave of Federal Reserve bond purchases brought investors into the corporate credit market.
The latest company figures follow a 46% decrease in earnings in the first quarter, driven by the initial consequences of the pandemic. Battered earnings fell below analysts’ already low expectations, but earnings beat estimates as trading desks benefited from historical market volatility in February and March.
Goldman’s earnings release follows Citigroup and JPMorgan hits on Tuesday. Both firms exceeded revenue and profit expectations as operating income and investment banking overshadowed the accumulation of credit reserves.
Wells Fargo fared worse in his report Tuesday. The bank posted its first quarterly loss since the financial crisis, with much of its earnings diverted to $ 9.5 billion in credit loss protections. Analysts had expected an accumulation of approximately $ 4.9 billion. The company’s net interest income also fell below expectations as low rates reduced the critical flow of earnings.
Goldman closed at $ 214.01 a share on Tuesday, down 6.9% so far this year.
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