Goldman Sachs revenue surges 41%

Cornelia Mascio
Luglio 17, 2020

Goldman Sachs (GS) posted second quarter earnings that far exceeded analysts' expectations on Wednesday morning.

Profits came in at US$2.2 billion (RM9.38 billion), translating into US$6.26 per share.

Like its peers JPMorgan Chase (JPM) and Citigroup (C), Goldman benefitted from its robust trading business.

The company's results were boosted by its trading activities - the bank generated $4.24 billion in fixed income revenue (versus analysts' expectations of $2.53 billion), the most in nine years.

Revenue rose 41% to $13.3 billion - the second-highest quarterly revenue ever for the firm - as three of its four divisions posted gains, led by bond trading revenue, which posted a surge of nearly 150% to $4.24 billion.

Goldman used a substantial amount of the money it generated from capital markets to bolster its capital levels and put money aside for possible legal settlements related to the 1MDB scandal.

The investment bank also scored record quarterly net revenue in both equity and debt underwriting as its corporate clients sought to raise funds to ensure adequate liquidity. Typically banks like Goldman want to keep that figure above 10%. The stock market plunged sharply in March, as many economies were starting to shut down, only to rebound just as sharply starting in April and running through the entire quarter.

Goldman set aside $1.6 billion for credit losses, up from $937 million in the first quarter, to cover soured loans. In addition, the bank stashed away an additional US$945 million for litigation and regulatory proceedings. Goldman said in January it aims to deliver a 13% return on equity and over 14% return on tangible equity within the next three years.

Rival Morgan Stanley reports quarterly results tomorrow.

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