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 Bloomberg Dividend Forecast, 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.
