Goldman Sachs Logs Big Q2 Revenue Rebound, Earnings Dip

Tom Burroughes Group Editor 15 July 2020

Goldman Sachs Logs Big Q2 Revenue Rebound, Earnings Dip

While some of its major banking peers have been hit by the pandemic, Goldman Sachs reported solid earnings for Q2, and within some of its divisions, such as global trading, revenues skyrocketed.

Goldman Sachs today reported that net revenues in the second quarter of this year rose by 41 per cent year-on-year to $13.3 billion, and surged by 52 per cent from the first three months of this year, buoyed by forces such as a big jump in debt and equity underwriting.

Net earnings that apply to common shareholders rose to $2.247 billion, against $2.198 billion a year earlier.

While the Wall Street firm has been building out its wealth management offerings, even pitching to clients outside its traditional ultra-HNW field in this space, the results showed that its investment bank and global markets business are important for its bottom line. Investment banking net revenue rose by 36 per cent on Q2 2019, at $2.66 billion. There were big rises in underwriting revenues, partly offset by financial advisory and corporate lending. 

At the global markets business, covering areas such as interest rate products and commodities, revenues skyrocketed by 93 per cent to $7.18 billion in Q2 from a year earlier. 

At the consumer and wealth management arm, revenues rose by a more modest 9 per cent, standing at $1.36 billion, but fell by 9 per cent from the first three months of this year. Within wealth management specifically, revenues rose by 7 per cent, at $1.1 billion, reflecting a rise in assets under supervision and higher transaction volumes. Private banking net revenues fell, affected by lower interest rates.

Across the entire group, operating costs rose by 37 per cent year-on-year to $8.4 billion. The group’s cost/income ratio for the first six months of this year was 67.4 per cent, narrowing by 65.6 per cent on the same period in 2019. 

Provision for credit losses was $1.59 billion for the second quarter of 2020, compared with $214 million for the second quarter of 2019 and $937 million for the first quarter of 2020, the firm added.

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