Goldman Sachs Group Inc. (NYSE: GS), reported their second-quarter results Monday. They exceeded Wall Street’s expectations for profit and revenues. Goldman Sachs Group Inc (NYSE: GS) reported its second-quarter results on Monday, surpassing Wall Street’s profit and revenue expectations.
The GS board also increased the quarterly dividend to $3.0 per share today. The shares of this financial giant are up over 20 percent for the current year.
Goldman Sachs earnings Q2 snapshot
Goldman Sachs profit grew by 150% in the last quarter of 2008, to $3.04 billion ($8.62 per share).
The bank has seen a significant increase in its performance due partly to the lack of previous write-downs, such as those associated with commercial real estate or the sale of consumer businesses.
Comparatively, analysts were at $8.34 a share and $12.46 Billion respectively. David Solomon, the CEO of GS stated in a recent press release:
The One Goldman Sachs approach allows us to serve our clients in a complex, yet improving environment, while deepening relationships with them.
In the same quarter of last year, multinationals reported revenue of $10.9 billion and net profit $1.22 billion.
Why did GS’s Q2 results show strength?
Goldman Sachs finished its last quarter with loans of $184 billion and deposits of $433 billion.
New York’s listed giant generated $2.24 billion net interest income during its second fiscal quarter, up by 33% year over year. David Solomon, CEO of the company:
Our second-quarter results are excellent, as is our performance for the entire first half of this year. This reflects strong growth year-on year in Global Banking & Markets as well Asset & Wealth Management.
Goldman Sachs Group Inc shares are trading at a near-all-time high. The shares are now trading at a price that is close to 3.5x their lowest point during the 2020 pandemic.
Goldman Sachs Release: What’s else noteworthy?
Goldman Sachs’ second quarter fiscal year was marked by a strong performance in fixed income, which grew 17% on an annual basis and exceeded expectations by $220 millions.
The Wall Street Bank’s recently completed quarter saw $1.73bn in investment banking revenue – up from $1.43bn a year earlier. According to the Monday press release, annualised return on equity was 10.9% for Q2.
In July, Jim Mitchell from Seaport Research Partners downgraded Goldman Sachs’ stock to “neutral”, citing an overvaluation.
Earlier, we based our Buy on GS’s highly discounted valuation, its above-average leverage in a recovery of the capital markets, and the underappreciated advantages from simplifying their business model.
Goldman Sachs’ book value per share is $327.
Performance of investment banking and the competitive landscape
Goldman Sachs Investment Banking Division reported an increase of 21% in fees, to $1.73 Billion. However, this was slightly below the StreetAccount estimate of $1.8 Billion.
This discrepancy is primarily due to lower than expected advisory fees. These totaled $688 millions compared with the $757.3 million anticipated.
Goldman, despite the deficit, increased its investment banking fees by 21%, a significant increase, but it was dwarfed by the 50%+ increases that rivals JPMorgan Chase & Citigroup reported.
JPMorgan highlighted the surge of activity at the end the quarter, as one factor that contributed to its performance.
Goldman Sachs’ performance in the investment banking sector was impressive, but it did not compare to that of some of its rivals. JPMorgan Chase, Citigroup and both have exceeded their expectations for investment banking and equity trading fees.
JPMorgan said that its outstanding results were due to a marked increase in the number of deals made towards the end.
The competitive environment highlights Goldman Sachs’s leading position in the Investment Banking sector. However, it faces stiff competition from major financial institutions.
The post Goldman Sachs Q2 profit beat street estimates due to better than expected fixed income could be updated as new information becomes available.
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