As expected, banks are unwinding and reversing the large credit provisions they set aside a year ago to handle the impact of COVID-19. As markets have recovered and inflows grown, this has helped lift profits. 

Goldman Sachs this week reported net revenues of $15.39 billion in the second quarter of 2021, rising 16 per cent from a year before. It logged net earnings of $5.49 billion in Q2, skyrocketing from $373 million a year before. The profit result was assisted by a sharp fall in operating costs - down to $8.64 billion from $10.414 billion.

The bank, like its peers, also swung from providing for credit losses a year ago as the pandemic erupted to reversing that position. In Q2 this year, there was a negative provision for credit losses of $92 million, against $1.59 billion a year before.

Net revenues in wealth management were $1.38 billion, 25 per cent higher than the second quarter of 2020. Management and other fees were higher, reflecting the impact of higher average assets under supervision, and net revenues in private banking and lending were higher, primarily reflecting higher loan balances, it said. 

On Monday, Goldman Sachs’s board of directors increased the quarterly dividend to $2.00 per common share from $1.25 per common share. The dividend will be paid on 29 September 2021 to common shareholders of record on 1 September 2021. During the quarter, the firm returned $1.44 billion of capital to common shareholders, including $1.00 billion of share repurchases (2.8 million shares at an average cost of $350.90) and $441 million of common stock dividends.

The firm had $672 billion of assets under supervision (AuS) in the consumer and wealth management sector at the end of June, up from $637 billion at end-March this year.

At the end of June, Goldman Sachs had a Common Equity Tier 1 ratio – a common international measure of a bank’s capital buffer – of 14.4 per cent.