Goldman Sachs (GS) reported a remarkable 150% increase in second-quarter profits compared to last year, driven by a surge in investment banking activity. The firm posted a net income of $3.04 billion, surpassing analyst expectations. Total revenues also rose by 17%, reaching $12.73 billion.
This performance boost provides CEO David Solomon with much-needed momentum following a challenging year marked by a dealmaking slump, a costly exit from consumer banking, and several high-profile departures from the firm.
⚡Goldman profits surge 150% from year ago on Wall Street rebound.
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📌14.66% since Jan 01, 2024. #US #stocks #bonds #nasdaq #sp500 #economy #finance #online #investments #money #wealth pic.twitter.com/2f3HDwqRkV— GravyT (@vgravyt) July 15, 2024
Goldman’s stock increased by more than 1% in Monday morning trading, and as of last Friday, the stock had climbed 24% year to date. Since Solomon took over nearly six years ago, the stock is up 114%.
During a conference call with analysts, Solomon expressed optimism about the future, stating, “We are in the early innings of a capital markets and M&A recovery, and while certain transaction volumes are still well below their tenure averages, we remain very well positioned to benefit from a continued resurgence of activity.”
Goldman Sachs is the latest major bank to show benefits from the investment banking rebound. Last Friday, JPMorgan Chase, Wells Fargo, and Citigroup each reported significant revenue increases compared to the second quarter of last year. This revival has provided a boost to these banks amid rising challenges for their consumer operations.
Goldman, which relies heavily on Wall Street for its performance, saw its investment banking fees rise by 21% from a year ago to $1.7 billion, with significant increases in debt and equity underwriting. Advisory fees also rose by 7%. However, its investment banking performance did drop compared to the first quarter, with fees dipping by 17%.
The key drivers behind Goldman’s second-quarter earnings surge were better-than-expected trading results and an increased focus on asset and wealth management. Fixed-income trading revenue rose 17% year over year, while asset and wealth management revenues increased by 27%.
Goldman Sachs reported that its second-quarter profits soared 150% from a year ago as investment banking surged, the latest signal that Wall Street is warming up after a two-year drought.$GS pic.twitter.com/MJboTAwftU
— Jonathan Rdz (@Jonathan100x1) July 15, 2024
The firm also addressed its decision to challenge the Federal Reserve’s latest annual stress test results, which called for an increase in Goldman’s stress capital buffer. CFO Dennis Coleman indicated that the firm plans to moderate its pace of stock buybacks compared to the most recent quarter. Solomon added, “Given this discrepancy, we are engaging with our regulators to better understand its determinations.”
Key Points:
i. Goldman Sachs’ second-quarter profits surged 150%, driven by a strong investment banking performance.
ii. Net income reached $3.04 billion, and total revenues rose by 17% to $12.73 billion.
iii. CEO David Solomon sees the bank well-positioned for a capital markets and M&A recovery.
iv. Goldman’s stock has climbed 24% year to date and is up 114% since Solomon took over.
v. Investment banking fees rose 21% year over year, with significant increases in trading and asset management revenues.
Conner T – Reprinted with permission of Whatfinger News
