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Goldman Sachs Q2 Profit Doubles, Results Top Estimates

GoldmanSachs 071613

Financial services firm Goldman Sachs Group, Inc. (GS) reported Tuesday profit for the second quarter that doubled from last year, reflecting strong revenue growth amid sharp gains across its operating segments, particularly investment banking. Both earnings per share and quarterly revenues significantly topped analysts' expectations.

"The firm's performance was solid especially in the context of mixed economic sentiment during the quarter. Improving economic conditions in the U.S. drove client activity and the strength of our global client franchise allowed us to deliver positive performance across a number of our businesses," Chairman and CEO Lloyd Blankfein said in a statement.

The New York-based global investment bank reported net earnings applicable to common shareholders of $1.86 billion or $3.70 per share for the second quarter, sharply higher than $927 million or $1.78 per share in the prior-year quarter, but declined from $2.19 billion or $4.29 per share in the first quarter. Net earnings soared to $1.93 billion from $962 million a year ago.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $2.83 per share for the quarter. Analysts' estimates typically exclude special items.

Goldman Sachs' quarterly net revenues, including net interest income, grew 30 percent to $8.61 billion from $6.63 billion in the same quarter last year, and topped seventeen Wall Street analysts' consensus estimate of $7.98 billion. However, net revenues declined 15 percent from $10.09 billion in the first quarter.

Total non-interest revenues surged 41 percent to $7.79 billion, while net interest income dropped 24 percent to $826 million from a year ago.

The company's investment banking business posted 29 percent growth in net revenues to $1.55 billion, with significantly higher debt underwriting revenues.

Net revenues in institutional client services were up 11 percent to $4.31 billion, with 12 percent growth in fixed income, currency and commodities revenues, as well as 25 percent increase in Equities client execution revenues.

Net revenues in investing & lending were $1.42 billion, soaring from $203 million last year, as U.S. equities jumped near record highs.

Investment Management revenues remained flat with last year at $1.33 billion.

The firm's Tier 1 capital ratio was 15.6 percent and the Tier 1 common ratio was 13.5 percent as of June 30, 2013, up from 14.4 percent and 12.7 percent, respectively, as of March 31, 2013.

"While the operating environment has shown noticeable signs of improvement, we continue to put a premium on disciplined risk management, particularly in regard to the firm's strong capital and liquidity levels," Blankfein added.

Goldman also declared a dividend of $0.50 per common share, payable on September 27 to common shareholders of record on August 30, 2013.

Goldman Sachs' peer JPMorgan Chase & Co. (JPM), the second largest U.S. bank by assets, reported on Monday a 31 percent rise in second-quarter profit from last year, driven by higher net revenue and significantly lower loan loss provisions. Total net revenues grew 14 percent to $25.21 billion from $22.18 billion in the previous year.

GS closed Monday's regular trading session at $163.00, up $0.20 on a volume of 4.13 million shares. In the past 52-week period, the stock has been trading in a range of $91.15 to $168.20.

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