Goldman Sachs beats on Q2 earnings

Goldman Sachs CEO Lloyd Blankfein. Photo: Mark Wilson / Getty Images.

Goldman Sachs just reported second-quarter earnings that beat on the top and bottom lines.

The firm reported earnings per share of $US3.72 on revenue of $US7.93 billion.

Analysts were expecting earnings per share of $US3.08 on revenue of $US7.55 billion, according to Bloomberg.

“Despite the uncertainty created by Brexit, we achieved solid results by continuing to serve our clients across our diversified franchise and by managing our business efficiently,” CEO Lloyd Blankfein said in a statement.

In the same quarter last year, Goldman reported earnings per share of $US1.98 on revenue of $US9.07 billion. Excluding legal fees, however, adjusted earnings per share were $US4.75.

Total trading revenues in Q2 came in at $US3.68 billion ($US3.67 billion expected), up 2% from the quarter a year ago.

Fixed income, currencies, and commodities — or FICC — trading revenues were $US1.93 billion ($US1.80 billion expected), up 20% year-over-year because of stronger revenues in interest rate products and commodities, and especially in currencies and credit products. That was partially offset by weak mortgage revenues.

“Although market-making conditions generally improved compared with the first quarter of 2016, Fixed Income, Currency and Commodities Client Execution continued to operate in a challenging environment characterised by low interest rates, political uncertainty and concerns about global growth,” the firm said.

Equities revenues were a miss, coming in at $US1.75 billion ($US1.88 billion expected) — down 12% from last year. The firm said that was driven by lower revenues in cash products and derivatives in Asia. Securities services saw slightly lower revenues.

“During the quarter, the operating environment for Equities was impacted by lower levels of client activity, lower market volumes and a decline in volatility compared with the first quarter of 2016,” the firm said.

Investment banking revenues came in at $US1.79 billion ($US1.56 billion expected), down 11% from the quarter a year ago. The firm saw lower advisory revenues and lower equity underwriting revenues. Debt underwriting revenues were higher, reflecting strong asset-backed activity.

Goldman said its investment banking backlog decreased from the ends of both the quarter a year ago and the first quarter of 2016.

Also of note, investing and lending revenues were $US1.11 billion, down 38% year-over-year, while investment management revenues of $US1.35 billion were 18% lower than the same quarter last year.

Compensation and benefits expenses of $US3.33 billion were down 13% year-over-year to reflect the decrease in net revenues.

In the first quarter, Goldman whiffed, reporting diluted earnings per share of $US2.68 on revenue of $US6.34 billion.

JPMorgan, Citi, Wells Fargo, and Bank of America Merrill Lynch have already reported second-quarter earnings. Morgan Stanley is set to report on Wednesday.

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