Goldman Sachs Group Inc. posted an unexpected surge in second-quarter profit as fixed-income earnings dropped less many analysts had predicted and investment-banking fees advanced.
Net income jumped 5% to $2.04 billion, or $4.10 per share from $1.93 billion or $3.70, the previous year, the New York-based firm announced today in a statement. The figure topped the $3.09 mean projection of 25 analysts surveyed by Bloomberg.
Chief Executive Officer Lloyd C. Blankfein has promised not to overreact to a fall in trading that’s hit its fifth year as he position the lender to take over market share from banks that are ceding ground. Blankfein is also banking on underwriting equities and bonds, which constituted 14% of revenue in the second three-month period, the highest fraction since 2000. Investment-banking fees for the first half rose to a record.
“We’ve got a strong beat here, primarily revenue-driven, and Goldman is a little more resilient than expected,†analyst Devin Ryan of New York-based JMP Group Inc. told Bloomberg in a phone interview.
Goldman Sachs added 1% to $168.59 as of 12:42 pm in New York. The shares lost 5.8% this year through yesterday, performing the worst in the Dow Jones Industrial Average.
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Revenue soared 6% to $9.13 billion. Compensation, which is the company’s biggest outlay, jumped to $3.92 billion to take up 43% of revenue, the same proportion as a year earlier.
Growth of the company’s stock investments in its Investing and Lending division, which hit $1.25 billion, was the biggest deviation from analysts’ projections. The figure was nearly double the $650 million Jason Goldberg of Barclays anticipated.
According to MarketWatch, the firm’s FICC segment, an important profit fuel for more than 10 years, had faced turbulence same as that affecting competitors. In a shareholder presentation in late May, Goldman President Gary Cohn admitted the company was facing a challenging environment.
To contact the reporter of the story: Yashu Gola at yashu@forexminute.com
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