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Goldman Sachs

Goldman Sachs Crushes Results After Trading Surges

Jul 18, 2022 | About 3 minutes

Ticker Symbol: GS

Goldman Sachs shares are up as much as 4% in premarket trading today after the company reported second-quarter results in which the company beat both on the top and bottom lines. After disappointing results from the investment banking divisions of the other large global systemically important banks, the results provided a much-required boost for the sub-sector especially as trading revenue surged at what is often considered Wall Street’s premier investment bank.

The bank reported earnings per share in the quarter of $7.73 per share versus the $6.65 expected by analysts. Revenue also came in higher than forecasts, coming in at $11.86 billion against Wall Street’s expectations of $10.67 billion. Despite the beat, however, revenue was down 23% year over year with a sharp decline in advisory fees along with the slow-down of the economy impacting results. Despite the decrease in advisory fees, the division still beat market expectations and results from the advisory divisions at other investment banks.

Goldman reported trading revenue of $6.47 billion, up 32% year over year and crushing the average analyst estimate of $5.81 billion. Fixed income, commodities, and currencies trading revenue grew to $3.61 billion ahead of the forecast of $3.1 billion. Equities trading came in at $2.86 billion beating the estimate of $2.72 billion. Investment banking revenue disappointed with quarterly revenue of $1.79 billion, down 48% year over year and lower than the expectations of $1.88 billion.

Equity underwriting business was also down sharply, lower by 89% against the figure in 2021. SPAC markets, the pandemic-induced easy money phenomenon of pre-revenue companies listing publicly, have almost disappeared. SPACs were a big boost to the equity underwriting divisions at most banks. Goldman terminated all work with SPAC companies because of new liability guidelines starting earlier this year. Debt underwriting also declined to $457 million, missing estimates for $571.3 million in revenue.

Goldman’s investment book, its balance-sheet investments in capital markets, posted a loss of $221 million during the quarter due to a broad decline in markets. Total investments stood at $16 billion, down from $22 billion at the end of 2019. Total asset-management revenue was down 79% to $1.08 billion driven mostly by that loss. The consumer and wealth management business posted revenue of $2.18 billion, up 25% from 2021. The bank’s Chief Executive Officer, David Solomon, said earlier this year that he expects the consumer banking division to stop reporting losses sometime after 2022.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.