Goldman Sachs Group Inc.’s trading unit powered a surge in profit in the second quarter.
Net income was $3.04 billion on $12.7 billion in revenue in the three months through June 30, according to a statement Monday.
Both fixed-income and equity traders outpaced analysts’ estimates, while a rebounding capital-markets business helped drive better-than-expected results across much of the company’s Wall Street operations.
Earnings in the second quarter were 2.5 times higher than what Goldman posted a year ago, when it was plagued by losses in real estate investments and the consumer-banking unit in the middle of an industrywide deal-making slowdown.
Shares of the New York-based firm pared earlier gains after the company said it plans to moderate the pace of buybacks because regulators increased Goldman’s capital-buffer requirement. The stock, which reached an all-time high of $479.88 on Friday, advanced 0.6% at 10:06 a.m. in New York.
“The year-over-year increase in our stress capital buffer does not seem to reflect the strategic evolution of our business and the continuous progress we’ve made to reduce our stress loss intensity, which the Federal Reserve had recognized in our last three tests,” Chief Executive Officer David Solomon said on a conference call with analysts. “Given this discrepancy, we are engaging with our regulators to better understand its determinations.”
The fixed-income trading business posted $3.18 billion in revenue, driven by strength in rates and currencies. The stock-trading unit logged $3.17 billion. Goldman touted its second-best quarter ever across both businesses in financing revenue.
Investment-banking revenue of $1.73 billion fell short of analysts’ average estimate of $1.8 billion. Merger-advisory fees were $688 million. That was less than the $785 million that JPMorgan reported last week.
Goldman’s equity capital markets business generated $423 million in revenue, and debt-underwriting revenue was $622 million.
The asset- and wealth-management business posted revenue of $3.88 billion, up 27% from a year earlier. Management fees climbed 8% as the bank seeks to shift growth to those fees instead of windfalls from balance-sheet investments.
In consumer banking, revenue was up 4% and transaction-banking fees dropped 15% from a year earlier. Those businesses are part of the unit that the bank has been disassembling as it reverses its push into retail banking.
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