Goldman Sachs (NYSE:GS) on Wednesday reported blowout second-quarter earnings as its reliance on trading and investment banking paid off amid the market turbulence caused by the coronavirus pandemic.
The bank generated $2.42 billion in profit, or $6.26 a share, crushing the $3.78 a share estimate of analysts. Revenue of $13.3 billion was more than $3.5 billion higher than the estimate, fueled by strong results in its trading and investment banking divisions, which made up three-quarters of the firm’s revenue in the period.
"Our strong financial performance across our client franchises demonstrates the inherent benefits of our diversified business model," CEO David Solomon said in the release. "The turbulence we have seen in recent months only reinforces our commitment to the strategy we outlined earlier this year to investors."
Of the six largest U.S. banks, Goldman gets the biggest share of its revenue from Wall Street activities including trading and investment banking. For the past few years that has been a detriment to the firm, as retail banking fueled by cheap consumer deposits has driven the industry’s record profits. Now, the bank’s model looks like a distinct advantage.
Bond trading revenue surged almost 150% to $4.24 billion, and equities trading revenue rose 46% to $2.94 billion. Together, the trading division produced roughly $2.5 billion more than analysts had expected. Investment banking revenue climbed 36% to $2.66 billion, about $550 million more than expected.
Shares jumped $8.08, or 3.8%, to $222.09.
