NEW YORK – Goldman Sachs had the second-best quarterly profit in the firm's history in the quarter ended in June, helped by a strong performance in its investment banking division that more than made up for a decline in trading revenues.
The New York-based bank said Tuesday that it earned $5.49 billion in the second quarter, or $15.02 a share, compared with a profit of $373 million, or 53 cents per share, in the same period a year ago. Last year's results were impacted by legal expenses related to the Malaysia 1MDB scandal.
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The results beat the expectations of analysts, who were looking for Goldman to earn $10.30 a share last quarter, according to FactSet.
Goldman has had several strong quarters during the pandemic, as the bank's traders and investment bankers have found numerous opportunities to profit from volatility and rising stock prices. The profits in the second quarter were the second highest in the firm's public history, trailing only the $6.71 billion Goldman made in the first quarter this year.
The bank's return on equity — a measurement of how well a bank profits from the assets it holds — was a hefty 23.7% in the quarter. A bank like Goldman aims to have its return on equity above 10%.
This quarter's performance was driven by the firm's investment bank division, which reported a 36% rise in revenues from a year earlier, helped by higher financial advisory revenues and more stock underwriting revenues. Goldman has been one of the beneficiaries of the increase in the IPO market the past year, particularly the use of what are known as SPACs, or special purpose acquisition companies. These SPACs look for private companies to take public, and Goldman has both advised SPACs on acquisition targets and helped them raise money from investors.
Goldman also had a hand in several large corporate deals this quarter, including the spin-off of WarnerMedia from AT&T.
The firm's trading desks had a more subdued quarter, although still strong by historic standards. Net revenues from trading were $4.90 billion, down 32% from a year earlier when heightened market volatility due to the pandemic gave traders ample opportunities to profit on market movement. Bond trading revenues fell 45% from a year earlier, also a reflection of how volatile the market was last year.
Revenues at Goldman for the quarter rose to $15.39 billion from $13.3 billion the same period a year earlier.
The bank announced it planned to raise its quarterly dividend to $2 a share starting in September, up from $1.25 a share.
Goldman's shares were down 1.6% around midday.