Goldman Sachs second-quarter net income doubles
16 Jul 2013
The second-quarter net income of Goldman Sachs doubled with gains in fixed income, currency and commodity trading as also investment banking revenue pushing results well beyond projections.
Goldman posted net income of $1.93 billion, as against year-earlier net income of $962 million, while earnings per share--reflecting the payment of preferred dividends stood at $3.70 from $1.78.
Net revenue, including net interest income, was up 30 per cent to $8.61 billion. According to analysts' expectations, per share earnings stood at $2.82 on revenue of $7.98 billion.
The revenue of the lender from fixed income, currency and commodity trading totalled $2.46 billion, as against $2.19 billion a year earlier and $3.22 billion in the prior quarter.
Total equities revenue was $1.85 billion, as against $1.7 billion a year earlier and $1.92 billion in the first quarter. Equities trading no longer reflected results from Goldman's reinsurance business, with the bank completing the sale of a majority stake in the business in a bid to adapt to higher capital requirements.
Analysts had expected improved results from a year earlier, boosted by stronger year-over-year trading activity, but dipping from first quarter in key areas such as bond trading and investment banking. Both businesses lost momentum with the Federal Reserve signaling it would wind down the bond-buying programme designed to help boost economic growth.
According to the bank, it had set aside $3.7 billion for compensation and benefits – including bonuses – in the second quarter, 27 per cent higher than the second quarter of 2012. The bank said the increase reflected "a significant increase in net revenues".
Lloyd Blankfein, chairman and chief executive officer said the bank's performance was solid especially in the context of mixed economic sentiment during the quarter.
He added, improving economic conditions in the US drove client activity and the strength of its global client franchise allowed the bank to deliver positive performance across a number of our businesses.
He said, while the operating environment had shown noticeable signs of improvement, the bank continued to put a premium on disciplined risk management, particularly in regard to the firm's strong capital and liquidity levels.