Goldman's profit jumps as market turbulence powers record equities trading

Goldman Sachs' profit jumped 22 per cent in the second quarter, as turbulent markets lifted equities trading revenue to a record and a pickup in dealmaking boosted investment banking. 

The results capture a growing trend of market turmoil boosting trading desks across Wall Street as investors rebalance their portfolios to manage tariff-related risks. 

Goldman's equities trading revenue rose 36 per cent to $4.3 billion, while fixed income, currencies and commodities hauled in $3.47 billion, 9 per cent higher than a year ago. Financing revenue in both equities and FICC hit a record. 

While trade policy uncertainty kept some companies on the sidelines, pent-up demand for dealmaking triggered a flurry of acquisitions. 

Still, the return of trade policy uncertainty in recent weeks has revived concerns about how long the momentum would last.

Goldman's investment banking fees stood at $2.19 billion, rising 26 per cent from a year ago. Advisory fees were significantly higher due to strength in the Americas and Europe, the Middle East and Africa. 

Revenue from debt underwriting fell slightly, while equities underwriting was unchanged. 

Overall profit was $3.7 billion, or $10.91 per share, for the three months ended June 30, compared with $3.04 billion, or $8.62 per share, a year earlier. 

Rivals JPMorgan Chase and Citigroup also reported strong trading gains on Tuesday.

 

ASSET AND WEALTH REVENUE FALLS 

Revenue from Goldman's asset and wealth management arm, which caters to institutions and high net-worth individuals, dipped 3 per cent to $3.78 billion due to weakness in equity and debt investments. 

The business is important for Goldman as it can offer steadier revenue than trading and investment banking. 

The bank set aside $384 million as provisions for credit losses, compared with $282 million last year. The provisions were mainly related to its credit card portfolio. 

Its headcount fell to 45,900, 2 per cent lower than the first quarter. The bank had planned to trim its staffing by 3 per cent to 5 per cent in an annual performance review process. 

Goldman was one of 22 banks that cleared the Federal Reserve's annual stress test last month, paving the way for it to increase its dividend by $1 a share from the third quarter. 

Its shares rose 1.2 per cent before the market open. They have climbed 23 per cent so far this year, making them the fifth best performer in the S&P 500 financial index. 

The bank awarded Solomon an $80 million stock bonus to retain him for another five years, drawing pushback from influential proxy advisers Institutional Shareholder Services and Glass Lewis. 

At its annual meeting in April, shareholders approved pay packages for the bank's executives, although with lower support compared to last year.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)