Goldman Sachs Q2 profit growth driven by investment banking
By Neil Dennis
12:10, 13 July 2021
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US bank Goldman Sachs reported a 16% rise in second-quarter net revenues on Tuesday and earnings that easily beat analysts’ expectations, thanks to growth in investment banking.
The bank reported net revenue of $15.4bn in the second three months of 2021, up 16% from the same quarter of 2020, eclipsing the $12.2bn expected by analysts polled by Refinitiv, but down from the $17.7bn reported in the first quarter this year.
Earnings per share rose to $15.02, up from $6.26 in the same period a year ago and beating analysts’ forecasts of $10.24 a share.
For the first half, net revenues stood at a record $33.1bn, the bank said. Year-to-date net earnings were $12.3bn, while six-month earnings per share stood at $33.64.
Investment banking
Revenues from investment banking were $3.61bn – the second-best quarterly performance ever – up 36% from a year ago, thanks to equity underwriting, particularly driven by strong initial public offering (IPO) activity.
David Solomon, chairman and chief executive of Goldman Sachs, said: “Our second-quarter performance and record revenues for the first half of the year demonstrate the strength of our client franchise and our continued progress on our strategic priorities.”
The bank breezed past analyst expectations in its first quarter, when record levels of mergers and acquisitions activity helped drive equity underwriting profits.
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Shares surge
Goldman Sachs shares have risen 44% since the start of the year as the global recovery gained traction and – as regulatory curbs on dividend payments were lifted – banks promised large shareholder returns.
Indeed, on Tuesday, Goldman Sachs said the board had approved a 60% increase in its dividend to $2 a share, which will be paid on 1 September. In addition, the bank has returned $1.44bn to shareholders during the second quarter through share repurchases and common stock dividends.
The shares were up 0.4% at $380.50 in pre-market trading in New York.
