Goldman Sachs Group Inc (NYSE:GS) posted a 74% increase in second-quarter earnings on a surge in lucrative fixed-income and tumbling costs. But a failure to enact an expected dividend increase dinged GS stock in the early going.
For the most recent quarter, Goldman Sachs had net income available to common shareholders of $1.63 billion, or $3.72 per share, up from $916 million, or $1.98 a share, last year.
Easy comparison played a part in the dramatic increase, as GS set aside $1.45 billion for regulatory and mortgage-related legal settlement in last year’s second quarter.
Regardless, Goldman exceeded analysts’ average estimate of $3 a share by a wide margin, according to a survey by Thomson Reuters.
Total revenue fell 13% to $7.93 billion from $9.07 billion, but that also topped Wall Street estimates, which stood at $7.58 billion.
GS Stock Trading Revenue Back With a Vengeance
Critically, Goldman Sachs — the bank most dependent on trading — saw activity in its trading business grow sharply. Revenue from trading in fixed income, commodities and currencies rose 20% to $1.93 billion in the second quarter. Analysts polled by Bloomberg forecast FICC trading revenue to hit $1.8 billion.
That was partially offset by a 12% decline in revenue from equity trading, which was depressed by weakness in Asia. Still, total revenue from trading rose 2% year-over-year and 7% sequentially to $3.68 billion.
Goldman’s net revenues in investment banking fell 11% to $1.79 billion, but debt underwriting revenue grew 20% to $724 million from $603 million in the year-ago quarter.
Equally important to the trading revenue gains, total operating expenses fell by more than a quarter to $5.47 billion.
If there was a blemish, GS was expected to increase its dividend to 70 cents a share from the current payout of 65 cents a share, according to the
, but it stood pat.
GS stock is now struggling to get back into the black as investors digest the numbers. For the year, shares in General Electric are off about 9%.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
