Trading, stock underwriting propel Goldman to record profit
On Tuesday, Goldman posted a second-quarter earnings of $3.44 billion, or $4.93 a share. That's compared to the $3.65 a share forecast by analysts. And not only did it eclipse the $2.05 billion profit it reported in the same period a year ago, but it surpassed its previous record of $3.22 billion logged two years ago.
"Our second quarter results reflected the combination of improving financial market conditions and a deep and diverse client franchise," said Goldman CEO Lloyd Blankfein in a statement.
The results may be shocking, but they're hardly a surprise. Analysts have been predicting that Goldman's fixed income, credit and commodity traders would report outsize earnings. At $6.8 billion, it was close to triple last year's $2.39 billion.
The group's income is particularly notable because it exceeds the record it just set last quarter, when it booked revenue of $6.56 billion.
But trading revenue wasn't the only highlight in Goldman's second quarter. Riding the wave of bank stock sales in the wake of regulators' stress tests, it made some $736 million in fees from underwriting equity offerings, including those of U.S. Bancorp (USB), BB&T (BBT) and Bank of New York Mellon (BK). That's compared with just $48 million last quarter and $616 million a year ago.
Only JPMorgan Chase (JPM) could claim it helped sell more stock than Goldman during the first half of this year, according to data compiled by Thomson Reuters.
Even as investors focus on Goldman's enormous profit, plenty of people without a stake in the firm's stock will likely notice its huge outlays for to pay its employees. The company said it paid $6.65 billion in compensation, 47.1 percent higher than during the same quarter last year. All told, Goldman spent 49 percent of its revenues on pay, it said.