Goldman Sachs another of the big US banks reported results for the second quarter of this year. In the case of Citigroup, investors were delighted and the bank’s shares appreciated significantly. In the case of Goldman Sachs, it was worse, but the shares still gained 2%.
The results were negatively impacted by low merger and acquisition activity, which weakened the investment banking division. Adding higher operating costs, the bank fell short of the earnings per share the market had expected.
The bank reported earnings per share of $7.73 versus $15.02 last year. This was influenced by the aforementioned investment banking business, which was weighed down by a sharp decline in underwriting activity under pressure from negative sentiment and risk aversion across global markets.
Investment banking revenues fell 48% year on year to $1.79 billion, below the expected $1.88 billion. Total operating expenses also rose to $7.65 billion versus $7.02 billion expected.
Results were saved by trading activity
There is uncertainty in the market due to the geopolitical situation and the Fed raising interest rates. As a result, clients are looking to rebalance their portfolios, which is significantly supporting the bank’s trading activity.
Trading income surprised with a very nice 32% year-on-year increase to $6.47 billion against an estimate of $5.82 billion. Financial advisory revenue was also above expectations at $1.20 billion against the market estimate of $1.04 billion.
Total net revenue was $11.86 billion in the second quarter, down 23% from the prior year and also below the market estimate of $10.67 billion. Net interest income was just $1.73 billion when the market was set at $1.92 billion.
Commenting on the results, the company’s chief executive David Solomon said.
“We delivered solid results in the second quarter as clients turned to us for our expertise and execution in these challenging markets.”